The Israeli social insurance and social assistance system is regulated by laws of (i) 1953, on national insurance; (ii) 1955, on survivor pensions; (iii) 1957, on old-age pensions; (iv) 1970, on disability insurance; (v) 1974, on pensions; (vi) 1980, on long-term care insurance; (vii) 1982, on benefits; and (viii) 1988, on personal benefits.
The social insurance covers all persons residing in Israel aged 18 or older. Persons who immigrated to Israel for the first time when aged 60 to 62, depending on the month and year of birth, are excluded from the system.
Social assistance is provided to all persons residing in Israel aged 20 or older (aged 18 or older for certain groups). The following categories are excluded: persons living in institutions whose expenses are paid entirely by the state, the Jewish Agency, a local authority, or a religious institution; persons in compulsory military service and their spouses; members of a kibbutz or cooperative village; certain vehicle owners; and students in higher education.
Funds are contributed by the insured person and the employer in the following proportions: (i) Insured person: 0.22% of earnings below and 3.85% of earnings above 60% of the national average wage (old-age and survivor pensions); 0.11% of earnings below; and (ii) Employer: 1.45% of earnings below and 2.04% of earnings above 60% of the national average wage (old-age and survivor pensions); 0.30% of earnings below. The minimum monthly earnings used to calculate contributions are the equivalent to a monthly minimum wage (a person earning less than this amount pays contributions as if earning the minimum). The maximum monthly earnings used to calculate contributions are 10 times the old-age basic amount as of January 1 each year (temporary measure).
In case of self-employed persons, the contribution is 3.09% of earnings below and 5.21% of earnings above 60% of the national average wage. The minimum monthly earnings used to calculate contributions are 2,004 new shekels (approximately USD 570).
The Government subsidizes old-age and survivor pensions at a rate of 17.1% of total employee and employer contributions.
The retirement age for the earnings-tested pension (social insurance) is 67 for men and 62 for women (gradually rising to age 64 by 2017). The age for receiving the pension without an earnings test is 70 for men and 67 for women (gradually rising to age 70 by 2020).
The pension is gradually reduced or suspended if income from work exceeds 57% (for an individual) or 76% (for a person with dependents, according to the number of dependents) of the national average wage. The reduction is 0.60 of a shekel for every shekel of income above the earnings test.
To be entitled to receive the benefits, the person must have at least 5 years of coverage in the last 10 years or a total of 12 years of coverage. No qualifying period is required to insured women who are widowed, divorced, abandoned, married to an uninsured husband, unmarried and aged 57 or older at the time of immigration, or receiving a disability pension during the month before reaching the retirement age.
An income supplement is paid if income, including the pension, is less than the minimum subsistence level.
A deferred pension is payable to persons older than the retirement age who did not meet the earnings test requirements for a pension.
A seniority increment is paid for more than 10 years of coverage. A housewife is not eligible.
A special old-age benefit (social assistance) is payable to new immigrants not insured because of their age at the time of immigration and to emigrants who returned to Israel, are insured and over the age to receive a pension without the earnings test, but do not satisfy the qualifying period condition.
An income support benefit (social assistance) is payable to those with at least 24 months of continuous residence (12 cumulative months for new immigrants), subject to an earnings and employment test; or those incapable of earning more than the minimum subsistence level.
Benefits are payable abroad under bilateral agreement.
The old age pension is: 17.35% of the monthly old-age basic amount for individual pensioners or 26.05% for a couple. Pensioners aged 80 and over receive an additional percentage. The monthly old-age basic amount is 7,975 new shekels (approximately, USD 2250).
The income supplement for pensioners younger than 70 is from 29.9% to 64.5% of the monthly old-age basic amount, depending on marital status and the number of children. For pensioners aged 70 to 79, the supplement is from 30.7% to 65.8% of the monthly old-age basic amount. For pensioners aged 80 or older, the supplement is from 32.1% to 67.8% of the monthly old-age basic amount. An additional 7% for all age groups is paid.
In case of deferred pension, the pension is increased by 5% for each year retirement is deferred. Further, the pension is increased by 2% for each year of coverage exceeding 10 years, up to 50% of the pension.
The dependent's supplement is 8.7% of the monthly old-age basic amount for the spouse and 5.5% of the monthly old-age basic amount for each of the first two children up to age 18 (age 20 if in higher education or the premilitary framework, age 21 if in military or volunteer service, age 22 in certain other cases). These supplemental rates are included in the pension rates above.
In case of the special old-age benefit, the benefits are the same as the social insurance old-age pension; while the income support benefit is between 20% and 25% of the monthly old-age basic amount is case of individual pensioners; or between 27.5% and 37.5% in case of a couple without children. The benefit amount varies with age. Widows, separated persons, and single parents receive a higher benefit.
Benefits are adjusted annually in January according to the increase in the consumer price index in the previous year.
The Ministry of Social Affairs provides general supervision; while the National Insurance Institute administers the program, collects contributions, and pays benefits through its branch offices.
Source:Social Security Programs Throughout the World: Asia and the Pacific, 2010, available at http://www.ssa.gov/policy/docs/progdesc/ssptw/2010-2011/asia/index.html