The power of decision: When must I start receiving retirement counseling?

Rebecca Algrisi, director of the Consulting and Research Division at Bank Hapoalim, has good answers to all these questions - and gives worthy advice

Rebecca Algrisi (photo credit: Courtesy)
Rebecca Algrisi
(photo credit: Courtesy)
When an employee retires he is required to make a series of significant decisions, such as, how much of his compensation money he withdraws at the time of retirement and what amount he designates for a monthly allowance that he will receive for the rest of his life, and exactly as this juncture we, as a bank, want to help him make the right and best decisions for him at this point and time.” So says Rebecca Algrisi, director of Consulting and Research Division at Bank Hapoalim, weeks after the bank inaugurated its new national Center for Pension Counseling and Retirement Planning, in the “Sasson Hugi” tower in the Ramat Gan Diamond Exchange complex. “For us, and for him,” adds Algrisi, the bank’s employee for the past 27 years, “the ideal situation is when the retiree comes to us at least six months to a year before retirement, because then there is still time to set goals and objectives, make changes and optimally plan for retirement in a variety of aspects before the date of retirement.”
What are the benefits of pension counseling and retirement planning offered by the bank over other entities that offer this to retirees, such as insurance companies or investment houses?
“First of all, the highest level of professionalism and absolute objectivity. Because the bank does not manage pension products such as provident and training funds or pension funds, we advise the customer on all products in the market equally, when we see only his best interests before our eyes. It is important to know that our income from pension consulting is a uniform commission, that we receive for it a quarter of a percent from all manufacturers in the market, so to the bank it doesn’t matter if it refers the customer to product A or product B.  That is, unlike companies that deal in the field, we have no interest in promoting certain products. That is, unlike companies that deal in the field, we have no interest in promoting certain products. That is the reason why we always choose the produce that best suits the customer and his needs. So, in fact, pension counseling is free of cost to the client, except for retirement planning, where a one-time counseling fee is charged.”
What course will a retiree who comes to get retirement advice from you undergo?
“If it is a client who already received pension advice from us over the years, it is likely that as he approach retirement age, we will call him and offer him retirement preparation advice. In the first stage, we will find all his pension assets - provident and training funds, executive insurance, pension funds, etc. - so that we know together the size of pension savings and insurance coverage, and whether they fit the needs and goals that he defined for the retirement period. Then we will explain to him what the tax implications of each decision and decision will be, and afterwards we will help him fill out and submit all the various forms and applications to the tax authorities. During these stages there will be quite a few no-return decisions that the customer will have to make, therefore it is important that he be exposed to all aspects of taxation and accompanied by a professional and objective pension consultant throughout the process.”
Can you give an example of a no-return decision?
“Because of the increase in life expectancy and quality of life, many women prefer not to quit working at retirement age 62, but to continue for another five years until 67, which is the mandatory retirement age, even if they have already accrued 70% pension in veteran funds.  The thing is that many of those women do not know that during these 60 months they were eligible to start receiving a pension from the pension fund, in addition to their monthly salary. If someone is entitled to receive, say, a monthly allowance of NIS 6,000 and did not know or did not notice, and continued the deposits to the fund, they would lose NIS 360,000, because these payments couldn’t been received retroactively because they continued to make deposits. Another example is that as of January 2008, benefit and compensation funds deposited into provident funds are annuity money. At the time of retirement, you may defer consideration of the taxable compensation, ‘designation of annuity.’ If several conditions are met, the same compensation can be obtained as an exempt annuity or as tax-exempt amounts from the exempt capital, at the age of eligibility. That is 62 years for a woman and 67 for a man, who have already started receiving a monthly allowance. This is a significant savings of tens of thousands of shekels.”
So, what will a client who comes in for regulated advice for retirement receive from you?
Our pension consultants are carefully selected and trained professionals. During the consultation conversation they will help the client optimally match the tax exemption and the tax deployment with the compensation he deserves, utilizing the rights enshrined in the law such as annuity and compensation succession. It is important for me to emphasize that this is a service we provide to customers of all banks, without differentiation, and not only in our new Ramat Gan service center, but in each of our national counseling centers spread across the country. In order to enable clients who are far from the center area to receive this significant consultation.
How do you summarize until now the implementation of the “Bachar Commission’s” conclusions from more than a decade ago, which one of the main goals was to increase the competition in the pension counseling market and make available objective pension advice to the population?
On the one hand, there is now more awareness of the issue of retirement counseling and planning, which is a welcome thing. On the other hand, the commission imposed some restrictions on counseling by the banks, which in my opinion should be reviewed again. For example, we are not allowed to contact employers and suggest that they send their employees to receive counseling from us, or the provision that we are only allowed to advise within the branches and that we are not allowed to extend beyond their boundaries.  These are examples of instructions and regulations that hurt the client and their right to choose to receive objective counseling before retirement, and in the end, also hurts the competition against other distribution channels in this field.”
Disclaimer: the bank is not a tax advisor. Everything stated above only comprises general information and explanation, which does not constitute pension advice, investment advice of tax advice, and it does not replace personal advice subject to provisions by law.