A question of age

Miri Nahmani, director of retirement planning consulting, explains the differences between the age of eligibility and retirement age by law.

An ultra-Orthodox couple watches the sea during a storm in the Mediterranean coast of the city of Ashkelon, Israel January 19, 2018. (photo credit: AMIR COHEN/REUTERS)
An ultra-Orthodox couple watches the sea during a storm in the Mediterranean coast of the city of Ashkelon, Israel January 19, 2018.
(photo credit: AMIR COHEN/REUTERS)
You have reached the age of 60 and whether you are a male or female, congratulations. The festivities are over, the greeting cards placed in the drawer, the guests have gone, and you look out and see somewhere, far away on the horizon, an equally significant date in your life - the day you leave work and enter retirement. Yes, you know that you are fast approaching this day, but you also know, within yourself, that you do not yet have a clear idea when exactly it will occur and how to prepare for it. You are likely to meet friends and acquaintances who suddenly talk about concepts like retirement age and eligibility age and the changes and innovations in the field over the last decade and a half, but you, as they say, find it difficult to find your hands and your feet within the complexity of instructions, rules and regulations. So in the coming weeks we will address here, the questions that have been asked by clients and also call on Bank Hapoalim experts, that will organize this field for you, so that you will arrive ready and prepared to integrate this, of such importance, in the life of every employee.
What age can you retire from work?
“The Retirement Age Act (2004) distinguished between several ages, the most significant of which is ‘Retirement Age by Law’ - 67 years for a man, and 62 years for a woman. At this age, you can retire from work and enjoy a monthly pension for which you have saved for all your years of work. Women who choose to continue working after the age of 62 will, after five years, reach the final step, the ‘compulsory retirement age.’ which stands at 67 years, which is also the age at which an employer can require any man or woman to retire from work. Another concept is ‘early retirement age,’ which is 60 years old for both men and women. At this age, the employee may begin to receive a pension, subject, of course, to the pension rights accrued for them thus far and the provisions of the law regarding early retirement. Early retirement can also begin before the age of 60 in some cases, for example, if you are employed in a place where this is possible or if you are about to retire from a unique workplace such as the IDF, Israel Police, Ministry of Defense and the like. There is also an early retirement path for disability, which you can receive accurate details about during a meeting with a professional and objective pension counselor.”

What exactly is pension counseling?
“Pension counseling addresses the employee’s pension savings throughout his or her working years, that is, even in his 40s and 50s. During that time, the pension counselor examines and advises on the employee’s pension products, such as what the monthly pension amount will be at retirement age and what insurance coverage is supposed to be preserved in the event of disability, G-d forbid or death. He also examines the standard of living to which the family has become accustomed over the years and what the monthly deposit rates are and if he can (and should) increase them. Moreover, he examines how much will he pay in management fees, and what is the level of risk of the various provident funds, all of course depending on his status - single, married or divorced, with children or without. It is highly desirable to get pension counseling when you enter the workforce and at any time there is a significant change in status - increase in wages, marriage, divorce, children and more.”

What are differences between pension consulting and retirement counseling?
Retirement counseling addresses all those intersections where the employee has finished working for the employer, so it is very important to reach him at least six months before retirement, if not sooner. Why? Because at that time, the employer releases all of the employee’s pension savings. All these funds have tax rules that vary from person to person, so it is important that the employee know them well and make the best decisions for himself. At this point, there will be quite a few decisions of no return that the employee will have to make. Therefore, it is important that he is exposed to all aspects of taxation and will be accompanied throughout the process by professional and objective pension counselors. The clients of all the banks can have professional counseling in the new Center for Pension Counseling and Retirement Planning, in the “Sasson Hugi” tower in the Ramat Gan Diamond Exchange complex and in each of the bank’s national counseling centers across the country.

What topics do consulting and retirement planning conversations focus on?
“Any termination of work is considered a ‘tax event’ by the tax authorities. All the decisions that the retiree makes at the time of retirement, that is here and now, will have implications for the level of his pension allowance from now on. When you sit down for retirement consulting and planning conversations, they will talk to you about taxable receipts and the fact that some of them can be spread forward or backward, on the tax exemption that you receive from the level of your recent salary to a double ceiling of seniority, etc. In this exclusive list of receipts are compensation funds deposited into provident funds, compensation funds to be paid by the employer, employer’s retirement grants such as unused sick leave, advance notice, special grants etc.”
Disclaimer: the bank is not a tax advisor. Everything stated above only comprises general information and explanation that does not constitute pension advice, investment advice of tax advice, and it does not replace personal advice subject to provisions by law.



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