Flug supports raising retirement age, taxes

In an interview with "Globes" in May, the incoming Governor of the Bank of Israel said women will have smaller pensions unless their retirement age rises.

Incoming Governor of the Bank of Israel Dr. Karnit Flug is in favor of raising the retirement age for women, as well as for men. In an interview with Globes Weekend Magazine G last May, Flug supported raising the retirement age, a controversial measure that raises public ire and was removed from the Economic Arrangements Law for 2013-2014, and will most likely be passed through normal legislative procedures.

Over the past two years, senior officials at the Ministry of Finance and at the Bank of Israel have tried strenuously to advance a measure, whereby the retirement age for women will rise from 62 to 64 and, in the future, gradually, up to 67, which is the current retirement age for men. Flug was a member of the government committee on raising the retirement age that found the change to be essential to the Israeli economy. Raising the retirement age for women is a must, said Flug in the exclusive interview with G.

I think that the matter is also in alignment with the Minister of Finances decision to make the worker top priority. Flug said in the interview that if the retirement age for women was not raised, they would need to face shrunken pensions, due to the rise in life expectancy. She rejected calls to first handle wage inequality among women and said: I think that to say that first we should deal with wage gaps and only later with the retirement age, in a sense condemns retiring women to poverty as pensioners.

Flug supports raising the retirement age for men as well: The fact that there isnt widespread support for raising the retirement age indicates, in my opinion, that there is a lack of awareness of the connection between retirement age, and the personal and state pensions that we end up with. If the National Insurance Institute and the pension funds are not actuarially balanced, and if life expectancy rises and the retirement age does not, it will obviously lead to a reduction in these benefits; it is all one system.

In order for it be possible to meet the payments, the pension saving period needs to be longer. It is obvious that the early retirement age for women contributes to the actuarial deficit, and so it makes sense to me that this deficit should be corrected through a correction in the retirement age.

Asked about the fact that many women leave the workforce as early as age 50, Flug said: There is no doubt that there are women who will be negatively affected by the change. Therefore, I suggested that the process should go hand-in-hand with an extension in the duration of unemployment benefits for women of the ages that are affected by the change. The ancillary tools that accompany the process are also very important. For example, we need to provide workers with more professional training, to maintain relevant skills in the changing job market. We must also address the matter of enforcing labor laws, and prohibition of age-based discrimination, in general, as well as specifically in this context.

And what about raising the retirement age for men beyond 67? Flug said: There is certainly room to consider the possibility of raising the retirement age for men, and at a certain point it will become necessary to raise it beyond 67. If we act on this matter early, we will be able to do so very gradually. Over the past few decades, the average life expectancy has risen one and a half years per decade, and this trend must be reflected in a dynamic process of raising the retirement age.

Want quality services? Pay more taxes. In an interview with Yediot Ahronots Sever Plocker last month, Flug addressed the tax burden and said that the public must pay more taxes if it wants high-quality public services: We must tell the public the truth. Whoever wants high-quality public education, and a high-quality public health system, must be willing to pay for them with high income taxes. There are no miracles here.

On the issue of the mega-corporations tax avoidance, Flug took a more conciliatory tone: I also object to a situation in which multi-national companies pay zero taxes, but I am troubled by the stigmatization of the business sector, and I am even more troubled by the extremism and the demagoguery that have dominated the debate.

Published by Globes [online], Israel business news - www.globes-online.com - on October 21, 2013

Copyright of Globes Publisher Itonut (1983) Ltd. 2013

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