‘Savings for every child’ plan moves forward

Knesset expected to approve program for January start.

By
December 4, 2016 20:08
2 minute read.
Moshe Kahlon

Koolanu chairman Moshe Kahlon. (photo credit: IMAGE PHOTOGRAPHERS)

 
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There will soon be a state-funded savings plan for every Israeli child, Finance Minister Moshe Kahlon said on Sunday.

Under Kahlon’s plan, parents will be able to open a savings account for any child under 18, into which the state will make monthly deposits, to be withdrawn by the child upon reaching the age of 18 or 21.

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“Kahlon, who initiated the bill for the savings plan for every child, wanted to encourage savings for children,” the minister’s spokesman Omri Harush told The Jerusalem Post.

“The money given to parents by the state through the [National Insurance Institute] child allotments would never actually reach the child, the parents usually spend it; we wanted to have something left for the children.”

The announcement came after the Knesset Finance Committee approved Kahlon’s bill unanimously on Sunday morning with support from across party lines. While the bill has not yet gone through second and third (final) reading in the Knesset plenum, everyone involved is certain it will become law in the coming days, and the NII has already started sending letters to eligible families urging them to open the savings accounts.

“This bill will pass. It was approved with the blessing of the coalition and opposition, together. No one is opposing this plan, so this vote was pretty much final. The rest is just formality,” Finance Committee spokesman Eyal Katzir told the Post.

Kahlon pushed for the initiative in the summer of 2015, when working on the 2015-16 state budget, as an alternative to fully reinstating (after previous cuts) the monthly welfare benefits for children known as child allotments.



The program is expected to cost an estimated NIS 2.65 billion a year and be available for any youngster eligible for child allotments. Eligible families can choose whether the savings account will be managed in a provident fund or bank.

After the account is opened, the National Insurance Institute will deposit NIS 50 a month, plus an additional NIS 500 when the child turns 18. If the child delays withdrawing the funds until he or she is 21, the NII will make an additional NIS 500 deposit. Parents can match the NII’s deposit with another NIS 50 each month from the family’s child allotments.

While the savings plan is set to kick off in January, Kahlon said a retroactive deposit will be made by the state for the period between May 2015 and December 2016.

“This is the first time that the State of Israel is saving money for our children. When they reach maturity they will find between NIS 18,000 and NIS 22,000 in their account and, with this sum, they can start their lives better regardless of where they were born or who their parents are,” Kahlon said on Sunday.

According to the minister, the program will help to close social gaps, advance equal opportunities for the middle class and weak segments of society, and raise awareness of the importance of saving.

“The goal of the plan is to make sure that our children will have the means to start a good life full of opportunity regardless of their family’s’ socioeconomic background,” he said.

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