State's unfunded pensions liability reaches NIS 668b

Almost half of the liability if for the defense establishment.

The state's pension liability for unfunded pensions reached NIS 572 billion in 2012. 44% of this amount, NIS 252 billion, relates to workers and pensioners of the defense establishment, the financial statements of the government of Israel for 2012 reveal. The liabilities balance in the statements does not include the future debts that will arise on account of active employees for their expected years of employment. If this future debt is taken into account, the full liability is estimated at NIS 668 billion.

According to the Ministry of Finance's calculations, in 2032, pension payments will reach NIS 26.3 billion, after which the amount is expected to decline.

The profit and loss account shows that the government of Israel has revenues of NIS 366 billion, and assets of NIS 478.8 billion. This compares with liabilities of NIS 2 trillion (about 200% of GDP), giving a capital deficit of NIS 1.5 billion, NIS 100 billion more than in 2011. A substantial part of the increase arises from the increase in debt issues as a result of the need to deal with the government's fiscal deficit, which rose steeply in 2012 to 4.2% of GDP, more than double the planned level.

This year too, a prominent feature of the statements is the debts that the government does not manage to collect and that cause the fiscal hole. According to the report, Israel's citizens owe the Tax Authority NIS 20.3 billion (about a tenth of the tax collected last year), some NIS 1 billion less than in the previous year. Most of the debt is owed by landowners who have not paid property taxes (NIS 8 billion), while another NIS 3.5 billion is due from businesses. Had the Tax Authority collected this sum, there would have been no need to raise companies tax. The Ministry of Finance does state that these are not bad debts, and that they are being dealt with.

Published by Globes [online], Israel business news - - on June 24, 2013

© Copyright of Globes Publisher Itonut (1983) Ltd.

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