One year after "Globes" exposed the high management fees Israelis are paying to pension and provident fund managers, the Ministry of Finance today published a new plan to increase competition in the pensions savings market.
As part of the plan, the Ministry of Finance makes clear that it will fix a ceiling for new management fees in the provident fund and executive insurance markets in an attempt to make them more attractive and strengthen incentives for the bank's distribution systems.
The Ministry of Finance also announced a range of steps, some of them important and others less so. In the coming months, the Ministry will receive feedback and comments on its plans and then push forward with legislation.
The proposed plans will result in an immediate fall in management fees which are mainly paid by customers with medium and small amounts of savings. These customers current pay well over the average. The Treasury's plans will increase cross subsidies within funds and improved the situation of those with small savings who usually have their savings through small-time insurance agents not only in provident funds but also in executive insurance.
This would seem to be bad news for institutional bodies managing pensions savings - the provident funds and insurance companies.
Minister of Finance Yuval Steinitz said, "The concern of the Ministry of Finance is the strength of Israel's economy and the welfare of Israel's citizens and as part of this their pension savings. Any significant improvement in the area of pensions touches every citizen including the rank and file citizen and Israeli workers. We are working on behalf of these citizens."
Published by Globes, Israel business news - www.globes-online.com - on November 30, 2010
© Copyright of Globes Publisher Itonut (1983) Ltd. 2010