The Knesset Finance Committee today approved by a majority the pension safety net, which will compensate some market losses by pension funds for savers near retirement age. Committee chairman MK Avishay Braverman opened the discussion by claiming that, "the net is full of holes and problematic. The net should be improved, defined and repaired."
Despite his criticism, Braverman added that it was better to approve this "not good" safety net than not to approve anything. This principle guided most of the committee members who claimed that it was only a temporary medication and not a solution to the pension safety net issue.
After a presentation of how the safety net will work by Ministry of Finance representatives, the members of the committee did not hold back their criticism. MK Shelly Yacimovich said, "I don't like this net because it is only designed for the poor and those earning the minimum wage. People who earn NIS 15,000 a month are not rich and they deserve compensation. The middle class has been abandoned here."
Supervisor of Capital Markets, Insurance and Savings Yadin Antebi defended the plan and said, "This is an absolutely reasonable safety net. The net is designed only for people who cannot repair the damage because they are close to retirement. We must remember that most of the people retiring today are protected by other instruments (designated bonds - AF) so their losses will not be significant.
According to figures released by the Ministry of Finance's capital market, insurance and savings division, the safety net will cover the savings of about 200,000 people. The savings are worth about NIS 100 billion as of November 2008. The two conditions for receiving protection from the net are that recipients must be 57 or over and have pensions (provident funds, pension funds, executive insurance and budgeted pensions) that do not exceed NIS 1.5 million. Pension wealth of NIS 1.5 million reflects a salary of about NIS 8,000, close to the average national salary. Even so, the ceiling for protection stands at NIS 750,000.
Published by Globes [online], Israel business news - www.globes-online.com - on January 13, 2009
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