"It is necessary to allow the banks to provide pension advice, which is a national challenge," Bank Hapoalim (TASE: POLI) chairman Yair Seroussi said today. He spoke in his capacity as chairman of the Association of Banks in Israel, which is holding its annual conference in Tel Aviv.
"Pensions are a critical issue, both at the level of households, and at the national level. Studies show that 86% of Israeli employees do not know what their pension money is invested in, 70% do not know the amount of management fees, and more than 50% cannot estimate the amount of their pension due on retirement. Many people will be surprised to discover how much lower their pension is without supplementary long-term savings," Seroussi said.
Seroussi proposed allowing the banks to offer a new product: deposits to provident funds for elderly people. These deposits will enjoy the tax breaks on pension savings, and will have transferability between provident funds. "This would be an important step that can make a decisive contribution to the sophistication of the pension market. Allowing the banks to offer this product will provide an alternative, simple, clear, and safe investment, and will create a threshold for effective net returns of pension savings products, without the need of intervention to set management fees."
Published by Globes [online], Israel business news - www.globes-online.com - on November 30, 2010
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