Supporting Workers Beyond Retirement Age
We’ve reduced cuts to pension income. We empower seniors, enabling them to earn a decent living.
The population beyond retirement age is larger and healthier than ever, and plays an active, significant role in Israeli society and the workplace. Most people who reach retirement age continue to work for at least a few more years.
Financial insecurity is an important component of the decision to continue working: One in five Israeli seniors lives in poverty, the highest rate among developed countries. Many others only manage to avoid poverty thanks to continued employment, which allows them to reduce the income gap stemming from low government benefits and inadequate pension coverage.
Clearly there are also many people who choose to continue working out of satisfaction and a desire to remain active. However, government policy is not prepared for senior citizen employment and does not encourage it – in some cases even placing obstacles in its path.
The Distortion of the National Insurance Law
For many years, senior citizens' benefits were cut, and even abolished in practice, for employees between retirement age and 70 (known as the "conditional age") whose monthly salary was over NIS 6,014 (gross), or less than $25,000 a year. To a significant extent this policy, dictated by the National Insurance Law, has created a negative incentive for work at these ages.
Reducing the allowance discriminated, and still does, against employees of the "conditional age", compared to those who receive income from other sources such as a pension fund, assets or equity, who receive a full benefit regardless of their monthly income.
Prior to the pandemic we began an effort to amend the law, in partnership with the organisation ‘Vehadarta – The Third Strength’. Later, we expanded the partnership to include a broader group of social organizations, and worked on promoting our proposal in the public and political arenas.
In November 2021, the Knesset responded to our efforts and passed an amendment to the law, so that the permissible wage threshold before offsetting the benefits increased by about 12% in 2022, to NIS 6,750 per month, and by another 15% in 2023, to NIS 7,750 per month.
For the long run, we believe that the best solution is to completely abolish the benefit offset and provide a full allowance to all women and men over retirement age who continue to work (as is currently the case for those age 70 or older). Today there are around 350,000 eligible employees, whose number is only expected to increase in coming years.
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