The Knesset plenum last night passed the compulsory pension bill on its first reading. The bill is sponsored by Knesset Labor, Welfare and Health Committee chairman MK Shaul Yahalom (National Religious Party) and Knesset Finance Committee member MK Avshalom Vilan (Yahad).
The bill mandates pension arrangements for all salaried employees in Israel. Former Finance Committee chairman MK Abraham Hirchson (Likud) initiated the bill. Yahalom and Vilan undertook to complete the legislative process when Hirchson was appointed Minister of Tourism.
Under the bill, the ministers of finance and industry, trade and labor will issue an ordinance that will apply to all salaried employees without any pension arrangement. The ordinance will stipulate that all salaried employees will have a pension arrangement up to a salary ceiling from the date the bill is readied for its second and third Knesset readings.
Pension payments will become as legally required as paying salaries under the Wage Protection Law (5718-1958). An employer who fails to fulfill the law will be liable to up to six months imprisonment and a fine of up NIS 200,000. If the violator is a corporation, the fine could reach up to NIS 1 million.
The Knesset in its first reading also passed last night a private members bill by MK Chaim Oron (Yahad) and MK Haim Katz (Likud) requiring that the Finance Committee approve any Ministry of Finance-proposed amendment of pension fund regulations. The bill closes a loophole in the Pension Funds Law (New Funds) (Ad Hoc Provisions) (5754-1994) created when the Finance Committee approved the 2004 Economic Arrangements Law, which allows the Ministry of Finance Supervisor of Capital Markets, Insurance and Savings to change the regulations without public supervision.
Published by Globes [online], Israel business news - www.globes.co.il - on January 25, 2005