Israelis' long-term savings up 10% in 2023

Amit Gal credit: Mark Neiman, Government Press Office

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The public’s pension and long-term saving assets reached NIS 2.5 trillion at the end of last year, according to the Capital Markets, Insurance and Savings Authority's report.

The public’s pension and long-term saving assets grew by almost 10% last year, to a total of NIS 2.5 trillion, according to the comprehensive report published by the Capital Markets, Insurance and Savings Authority, headed by Amit Gal, for 2023.

Last year was a troubled year for Israelis and the Israeli economy, but growth in long-term savings was rapid. Total assets of the public’s pension funds grew by 11% to NIS 1.2 trillion by the end of the year, with assets of the new pension funds up 20%, to NIS 727 billion.

The largest amount deposited with new (comprehensive) pension funds was with the funds of Menora Mivtachim - 15.4 billion in 2023, representing a 23% rise within a year. Next comes Harel, in whose funds NIS 12.7 billion were deposited, representing a rise of 16%, and in third place was The Phoenix Holdings, with NIS 9.76 billion deposited, representing a rise of 33%. The biggest percentage gain was by the pension funds of More Investment House, which began operating in April 2022, and in which NIS 383 million were deposited last year, a rise of 377%.

Falling management fees

Another encouraging figure indicates that average management fees as a percentage of assets have been on a declining trend for the past five years. On life insurance policies, the average management fee fell from 0.94% in 2019 to 0.81% in 2023; on provident funds the decline was from 0.57% to 0.53%; and on the new pension funds it was from 0.21% to 0.16%. Management fees as a percentage of deposits into pension funds fell from an average of 2.12% in 2019 to 1.63% last year.

The lowest average management fees as a percentage of comprehensive pension fund assets were at Ayalon Meitav, at 0.1%, followed by Atshuler Shaham, at 0.13%, while the highest were at the small pension fund of Infinity, at 0.19%, and, among the large funds, 0.17% at Harel and Migdal.

Last year, the Slice provident funds affair broke. A wave of complaints from the public and suspicions of management failures led to the opening of an audit in early 2023 at Slice. Towards the end of last year, CPA Efi Sandrov was appointed special manager at the company. The Capital Markets, Insurance and Savings Authority froze withdrawals from all Slice funds (some NIS 4 billion) several times, during this year as well.

Capital Markets, Insurance and Savings commissioner Amit Gal Authority said on the release of the report: "The Authority acts to ensure a fair and safe environment for financial consumers in a field in which there are considerable disparities of power and of knowledge. Through professional supervision and with the appropriate allocation of resources we will be able to continue to maintain a competitive, developing, and leading market by international standards that will continue to support the growth of the Israeli economy."