An agent suggests transferring your Pension? First ask who benefits.
You received a call from an Insurance agent: “Your management fees are too high.” “I have a better Pension fund.” “You should transfer your Pension now.” “The new company has achieved excellent returns.”
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He may be right.
Sometimes it is indeed right to transfer 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. You may be able to lower management fees, move to a more suitable investment track, improve service, or consolidate savings.
But before transferring your Pension, you need to stop and think.
Because Pension is not just another small financial product. It is usually the largest sum of money most people will accumulate in their lifetime. Precisely for this reason, it is also of great interestThe "price of money" – the amount paid for the use of someone else’s money, as income to the depositor or as a cost to the borrower. to the managing entities and agents who distribute their products.
Why is Pension so interesting?
Because Pension involves a great deal of money — over many years.
Even if you are young and your accumulated savings are not yet substantial, additional funds are deposited every month by your employer and through salary deductions. Over the years, this can amount to hundreds of thousands of shekels and even more.
For the entity managing the Pension, each such customer can be worth a great deal in management fees over time.
For an agent who is paid for transferring customers, moving many savers can also become a significant business.
And that is precisely the point:
A recommendation to transfer a Pension can be professional and appropriate — 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: explaining, reviewing, comparing, handling forms, and helping savers make better decisions.
But it is important to understand: a pension agent is not always a completely objective adviser. They often have business relationships with pension entities and may receive compensation from them.
That does not mean their recommendation is not good.
It does mean you should not accept it blindly.
A Pension transfer is not a technical procedure
Sometimes a Pension transfer is presented as if it were as simple as pushing a button: you sign, switch, and that is it.
But in practice, such a transfer can affect several important things:
- The management fees you pay.
- The investment track and level of risk.
- Insurance coverage for disability and survivors.
- Tkufat Achshara (תקופת אכשרה)A 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.
- And the ability to properly compare the current situation with the new one.
The problem is that you do not always see all of this in a short phone call.
When can a transfer be appropriate?
A Pension transfer can be a good decision if your management fees are high, if you are in an unsuitable track, if the service is poor, if you have several scattered accounts, or if you received a better and clearer offer.
But a good transfer should be explained with 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..
- And whether there is anything you could lose along the way.
Compare before transferring
Before deciding to transfer your Pension, it is advisable to check the data yourself. In the table we created for you, based on Capital Market Authority data, you can compare Pension funds by Returns, management fees, asset size, and investment tracks — and assess whether the offer you received is truly better than the other options.
It is important to remember: past data are a comparison tool, but do not guarantee future Return. In addition, the table does not replace a review of your Insurance coverage, Tkufat Achshara (תקופת אכשרה), and personal rights.
Questions you must ask before transferring a Pension
Before signing, ask the agent:
Before you sign
- Do you receive compensation from the entity you recommend I transfer to?
- Do you have distribution agreements with all entities or only some of them?
- What are my current management fees, 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 have the long-term returns been, not just those of the past year?
- Will my Insurance coverage change?
- Is there a new Tkufat Achshara (תקופת אכשרה)?
- Is there a problem if I have a pre-existing medical condition?
- Have I received a written rationale document?
- What other alternatives did you examine, and why are they less suitable?
The right to choose is yours
Even if your workplace has a “company agent,” the Pension is yours.
You are entitled to ask questions, request explanations, compare options, obtain an offer from another provider, choose another agent, or contact the pension provider directly.
Do not let anyone 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 things here” or because “everyone is switching now.”
The bottom line
Your Pension savings are among your most important assets. Therefore, when an agent recommends transferring them to another company, you should examine the recommendation carefully.
The transfer may be right. It may save you money and improve your situation. But it may also primarily benefit the person who is compensated for the transfer.
Before transferring your Pension, check management fees, the investment track, long-term returns, Insurance coverage, Tkufat Achshara (תקופת אכשרה), existing rights, and the rationale document.
Simply put:
Do not transfer your Pension just because someone called with an offer. Transfer it only if you understand what you stand to gain, what you may lose—and who else benefits from the transfer.
Sources and links
- State Comptroller — Aspects of funded Pension and the pension distribution market — A report addressing, among other things, potential conflicts of interest in the pension distribution market and the compensation model for Insurance agents.
- Kol Zchut — Fiduciary duties of a pension adviser and agent — An explanation of the difference between a pension adviser and a pension agent, and of the fact that an agent may have an affiliation with the products they market.
- Kol Zchut — Choosing a pension agent — Information on an employee's right to choose a pension agent, choose a pension provider, or act without an external agent.
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