Herzog proposes 'children's trust fund'

According to offer, every baby born would get a savings account, with any additions to the standard child allowances deposited into it.

Herzog 224.88 (photo credit: Ariel Jerozolimski [file])
Herzog 224.88
(photo credit: Ariel Jerozolimski [file])
A proposal to provide every child born in Israel with a trust fund will be presented to cabinet ministers in the coming weeks by Minister of Welfare and Social Services Isaac Herzog, it was announced on Tuesday. Based on similar state-run trust funds recently initiated in Britain and the US, Herzog's proposal, which is backed by the National Insurance Institute, would mean that every baby born here would get a savings account, with any additions to the standard child allowances deposited into it. Children from low-income families would also receive a financial bonus at birth. "It's a simple idea," said Herzog, who has been working with professionals from his office and the NII over the past few months to devise the plan. "It will build capital for every child from the day they are born and the funds will help them get started in their adult lives." Herzog said the long-term goal of the plan was to help families living below the poverty line to break the cycle. "Instead of financing an immediate solution [to the poverty crisis] that will not last for future generations, I believe that if we move in this direction, we will be able to reduce existing socioeconomic gaps in society and, with time, even eradicate them," he said. The plan is expected to be presented at the next meeting of the Ministerial Committee for Child Allowances, which is headed by Minister of Labor, Trade and Industry Eli Yishai. Yishai and his Shas party are expected to demand an increase in state child allowances, which have been significantly cut in recent years. "We hope that his [Herzog's] intention to push for an alternative program will not affect Eli Yishai's current plan to raise child allowances," Roi Lachmanovitch, a spokesman for Shas, told The Jerusalem Post. The party has placed much emphasis on the need to raise the benefits to increase the incomes of larger families. "Eli Yishai will not consider any other option but to raise child allowances, and he calls on Herzog and [Finance Minister] Ronnie Bar-On to help him in raising these benefits." Lachmanovitch said that while trust fund programs seemed to be working in other countries, Israel's situation was different. "What will happen to the families who need the money for food to survive day to day?" he asked. "If everyone wants what is best for the country's children, then bringing up another option at this stage will only slow down the process already begun by Shas to increase the current child allowances." Herzog, however, was quick to say that his proposal would not take funds away from existing child allowances, which are received by all Israeli families with children under 18. The trust plan, if approved, would be run initially either as a pilot program or offered on a voluntary basis, he said. "This process will constitute a new horizon for the children of Israel," said National Insurance Institute director-general Esther Dominissini. "It will assist low income families in breaking out of the cycle of poverty, which is passed down from generation to generation." Several details still need to be ironed out, including how to address existing children and at what age the funds can be accessed. In addition, family members, friends and even the children themselves would be able to deposit money into the accounts, which would receive interest and be entitled to certain tax breaks. The savings would be made available to the children when they reach adulthood for education, housing or business.