Provident funds fees rise sharply

Management fees for provident funds rose by 29.6% in 2007 to an average of 0.83% of funds managed from 0.64% in 2006. Provident funds manage NIS 277 billion in long-term savings.

Last year, the banks sold their provident funds to insurance companies and investment houses, which raised the management fees. Provident fund members paid an aggregate NIS 2.2 billion in fees in 2007, including NIS 506 million thanks to the fee hikes.

Sources believe that the average provident fund management fee will rise further to 1.15% during 2008, which will cost the funds' members an additional NIS 1 billion. Provident fund members will pay an aggregate NIS 3 billion in fees in 2007-09.

Fee hikes by provident fund managers include the following:

• DS Securities & Investments Ltd. (TASE:DSIN) raised its average management fee from zero to 0.8% in October 2007.
• Prisma Investment House Ltd. raised its average management fee from 0.75% to 1.2% in November 2007.
• Harel Insurance Investments and Financial Services Ltd. (TASE: HARL) raised its average management fee from 0.7% to 0.86%.
• Migdal Insurance and Financial Holdings Ltd. (TASE: MGDL) raised its average management fee for Kahal Employees Supplementary Training Fund from 1% to 1.5% this month.
• Excellence Investments Ltd. (TASE: EXCE) and Menorah Mivtachim Holdings Ltd. (TASE: MORA) have raised their management fees for the provident funds they acquired.
• Clal Insurance Enterprises Holdings Ltd. (TASE: CLIS) will raise its average management fee to 1.25% in March.

Published by Globes [online], Israel business news - www.globes-online.com - on January 27, 2008

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