National Insurance, a pension boost

Every Israeli who is a resident of the State of Israel is required by law to make monthly payments to the National Insurance Institute.

Every Israeli man and woman who is a resident of the State of Israel is required by law to make monthly payments to the National Insurance Institute (NII). If the person receives a monthly income - whether as an employee or a self-employed person - his/her payments are calculated according to his/her monthly income, as well as his/her martial status, number of dependants, etc. Those who do not receive a permanent monthly income have to pay a minimum of NIS 180 a month. These payments entitle women to receive a monthly income from the age of 64 and men from the age of 67. That income is small, but it is a very welcome addition to a pension. The NII's monthly payments to pensioners are the same for everyone who has worked for the same number of years. Unlike a pension fund, which makes monthly payments to the retiree according to the amounts that have been paid in, the NII is not concerned with how much money a person has paid. New olim of retirement age are also entitled to monthly payments from the NII. Monthly payments to the NII can amount to 14% and more of one's monthly income. These payments are divided between the employer and the employee. According to the regulations in force since the beginning of 2008, all residents must make monthly payments to a pension fund. This means that a self-employed person must make payments of well over 25% to the NII and the pension funds. Local residents make payments once they reach the age of 18. Men make payments during a period of 49 years, and women for 46 years. The amount accumulated in each account during that period is very large. However, the monthly payments ultimately paid out are very small. The monthly NII payment to a retired bachelor or spinster, widow or widower or divorcee amounts to 16% of the average monthly salary and 24.0% for a couple. This works out to NIS 1,264 and NIS 1,896, respectively. For those who have worked consistently since the age of 18, the monthly payment received can amount to over NIS 1,800. It can rise to around NIS 2,200, if the person worked until the age of 70. The NII will not give monthly payments to those men or women between 67 and 70 who continue to earn a monthly income (not derived from a pension fund) of over NIS 4,368 for a single person or NIS 5,824 for a couple.