Is the agent suggesting a pension transfer? First ask who profits
You receive a call from an insurance agent: “Your management fees are too high.” “I have a better fund.” “You should transfer your pension now.” “The new company achieved excellent returns.”
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The agent may be right.
Sometimes transferring a pension fundA savings vehicle based on mutual risk sharing that includes insurance coverage in cases of disability or death. or another pensionA monthly payment made to a person after retirement from work in order to help maintain their standard of living. product is the correct decision. You may reduce management fees, move to a more suitable investment track, improve service, or consolidate savings.
But before transferring your pension, stop.
A pension is not another small financial product. It is usually the largest amount of money most people will accumulate in their lifetime. That is precisely why it is also highly valuable to the institutions that manage it and the agents who distribute their products.
Why is the pension so attractive?
Because a pension contains a great deal of money over many years.
Even if you are young and your accumulated balance is not yet large, more money enters each month from your employer and salary. Over time, it can reach hundreds of thousands of shekels or more.
For the institution managing the pension, each customer can be worth substantial management fees over time.
For an agent receiving compensation for transferring customers, moving many savers can also become a significant business.
That is the point:
A recommendation to transfer a pension can be professional and correct—but it can also be influenced by financial incentives.
An agent can help—but is not always neutral
There are excellent pension agents who do important work: they explain, examine, compare, handle forms, and help savers make better decisions.
But a pension agent is not always a completely objective adviser. Agents often have commercial relationships with pension institutions and may receive compensation from them.
That does not mean the recommendation is bad.
It does mean that you should not accept it blindly.
A pension transfer is not a technical action
A transfer is sometimes presented as if it were only a click: you sign, transfer, and finish.
In practice, it can affect:
- The management fees you pay.
- The investment track and risk level.
- Disability and survivors’ insurance coverage.
- A qualifying periodA period from the start of the insurance during which the insured is already paying premiums but is not yet entitled to compensation..
- Service and availability.
- Existing rights.
- Your ability to compare the current and new positions properly.
All of this is not always visible in a short phone call.
When can a transfer be right?
A pension transfer can be a good decision if your management fees are high, your track does not suit you, service is poor, savings are scattered across several funds, or you receive a better and clearer offer.
But a good transfer needs to be explained in numbers.
It is not enough to hear:
“The new fund is better.”
You need to understand:
- How much you pay today.
- How much you will pay after the transfer.
- Whether the management-fee benefit is temporary.
- Whether the new track has the same risk level.
- What happens to the insurance coverageThe list of events and damages for which the insured is entitled to compensation..
- Whether you may lose anything along the way.
Questions you must ask before transferring a pension
Before signing, ask the agent:
Before you sign
- Do you receive compensation from the institution to which you recommend transferring me?
- Do you have distribution agreements with every institution or only some of them?
- What are my management fees today, and what will the new fees be?
- Is the management-fee benefit permanent or temporary?
- Is the new track similar to my current track?
- What were the long-term returns, not only last year’s return?
- Will my insurance coverage change?
- Is there a new qualifying period?
- Could a pre-existing medical condition create a problem?
- Have I received a written reasoning document?
- Which other alternatives did you examine, and why are they less suitable?
The choice is yours
Even if your workplace has “the company’s agent,” the pension is yours.
You may ask questions, request explanations, compare, obtain an offer from another institution, choose another agent, or approach the pension institution directly.
Do not allow anyone to transfer your pension savingsA general term for long-term savings products (pension fund, managers’ insurance, or provident fund) intended for retirement. simply because “that is how we do it here” or “everyone is transferring now.”
The bottom line
Pension savings are one of your most important assets. When an agent recommends transferring them to another company, examine the recommendation carefully.
The transfer may be right. It may save money and improve your position. But it may also mainly benefit the person receiving compensation for the transfer.
Before moving a pension, check management fees, the investment track, long-term returns, insurance coverage, qualifying periods, existing rights, and the written reasoning document.
In simple terms:
Do not transfer your pension merely because someone called with an offer. Transfer only if you understand what you gain, what you may lose—and who else profits from the transfer.
The quality of our articles is very important to us. If you find an error, inaccurate information, or a detail that needs updating, please email us at:
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Sources and links
- State Comptroller — Aspects of funded pensions and the pension distribution market — A report addressing, among other things, possible conflicts of interest in the pension distribution market and insurance-agent compensation.
- Kol Zchut (כל־זכות) — Fiduciary duties of a pension adviser and agent — The difference between a pension adviser and agent, and how an agent may have an affiliation with products being marketed.
- Kol Zchut — Choosing a pension agent — The employee’s right to choose a pension agent or institution, or to act without an external agent.
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