Quietly, quietly, as part of the state budget bill, it is planned to harm a weak population that does not have the lobby to fight for it. Under the name “The Laundered”, the stoppage of the increase in the tax benefit for withdrawing a pension benefit in 2025, in the deciding section, it is written: “As part of the government’s steps to make adjustments… it is proposed to amend the exemption section on pension and leave it as it is today.”
For those of us who are not familiar with the details, we will explain that in 2025 the pensioners were supposed to benefit from an exemption of NIS 1,350 on the pension allowance they receive. The Treasury now proposes to cancel this exemption.
Let’s recall that this exemption was born about 10 years ago due to an injustice caused to the general public already in 2008 with the cancellation of the ability to withdraw tax-free amounts – the harm known to the general public as the cancellation of capital provident funds. As compensation, the income tax decree was issued in 2012 to increase the exemptions that are given for a monthly pension, yes you will be surprised, it is also subject to tax and the last and most significant pulse of this exemption was supposed to apply in 2025.
Apart from the injustice caused to the entire crowd of people saving for a pension, what is even more troubling is the ease with which it is proposed to cancel an amendment that is supposed to provide solutions specifically to populations that do not benefit from extensive lobbying and that do not fully understand the high language mentioned in the bill and probably do not remember that the goal was to correct an injustice from 2008.
Even more troubling is the fact that “under the spotlight” is another change made by the previous government, with the aim of alleviating the budgetary burden that arose as a result of the issuance of bonds intended for members of the pension funds, in which the state committed to guaranteeing a return of 5.15% on 30% of the assets for comprehensive pension savers, in exchange for ceasing the issuance A new designated bond that gave security to pension fund savers. Now when we see how easily benefits can be canceled, the question arises as to how much this promise can be trusted and if the next time they look for a budget source, this promise will not be challenged and canceled or cut.
Yaron Shamir, BizPortal commentator on pension and retirement matters, owner of a pension consulting company.
The above should not be considered as a recommendation to carry out operations and/or advice on a pension product and/or pension marketing and/or a recommendation to carry out its operations/or advice on a financial product and/or financial marketing and/or tax advice/ and/or financial advice and/or advice Legal and/or counseling of any kind.
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