Starting work and managing your pension wisely
Starting work also means beginning one of the most important savings plans you will build in your lifetime—your pension. This page explains how to choose the product, managing institution and investment track, reduce management fees, and perform simple checks that keep your savings organized and suited to your needs over the years.
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Starting a new job is an exciting moment of growth—a first salary, stability, and a sense of progress. Alongside the excitement, however, this is one of the most important financial crossroads in your life. Decisions made during the first few months will directly affect your standard of living decades from now: where your money will be managed, how much you will pay for that management, and how it will be invested.
Most people simply sign whatever they are given. But because pension savingsA general term for long-term savings products (pension fund, managers’ insurance, or provident fund) intended for retirement. are the largest savings most of us will ever have, small decisions at the beginning can add up to hundreds of thousands of shekels over the years.
1. Which pension plan should you join?
Israel has three main pensionA monthly payment made to a person after retirement from work in order to help maintain their standard of living. products, and the choice between them should suit your personal circumstances:
Keren Pensia (קרן פנסיה): The most common product. It combines retirement savings with disability and survivors' insuranceA contract under which an insurance company undertakes to compensate the insured in the event of damage in exchange for a periodic payment.. Its advantages include relatively low management fees, built-in insurance coverageThe list of events and damages for which the insured is entitled to compensation., and a mechanism that provides a guaranteed returnThe profit (or loss) from an investment over a certain period, usually expressed as a percentage of the original amount invested. on part of the savings under a framework set by the state.
Bituach Menahalim (ביטוח מנהלים)A savings product based on an individual contract between the saver and the insurance company, combining a savings component and insurance coverage.: An older product based on an individual contract. It may sometimes include historical terms, but its management fees are generally higher and it is less common among new members.
Kupat Gemel (קופת גמל): A savings product without built-in insurance. It can suit people who manage their insurance separately or use it to supplement existing savings.
2. Who will manage the money?
After choosing the type of product, you need to choose the managing institution—an insurance company or an investment house.
Compare institutions using three measures:
- Long-term returns: The institution's performance in the capital market.
- Management fees: The price you pay for management.
- Service and operations: How easy it is to deal with the managing institution.
3. Management fees—how much do they really cost you?
This is the price you pay for having your money managed and invested over the years. It is divided into two parts:
- Management fees on deposits
- A percentage of every amount deposited each month, from your net pay and your employer's contributions.
- Management fees on accumulated savings
- An annual percentage of all the money accumulated in the fund over the years.
Default pension funds
Kranot Brerat Mehdal (קרנות ברירת מחדל), or default pension funds, were created as part of a government reform intended to increase competition in the pension market and reduce management fees, especially for young employees, people who are new to the workforce, and employees who have little bargaining power with pension providers.
Through a tender, the state selects funds that offer especially low management fees—for 2026, up to 1% of deposits and 0.22% of accumulated savings—for 10 years. Over decades of saving, lower management fees can add up to a very significant increase in the future pension amount. For 2024–2028, you can join one of these funds:
- Altshuler Shaham Gemel and Pension
- Meitav Gemel and Pension
- More Gemel and Pension
- Infinity Hishtalmut, Gemel and Pension Management
4. Investment tracks and risk level
Your money does not sit in a bank account; it is invested in the capital market. The investment track determines the level of risk and the return, or profit, over time.
HaModel HaChiliani (המודל הצ'יליאני), the age-based model
This is the automatic mechanism used by most funds:
- Younger savers (up to age 50)
- Higher exposure to shares. A long investment horizon makes it possible to absorb temporary market declines in exchange for higher potential returns.
- Approaching retirement
- Exposure to shares decreases, with a move to more conservative tracks such as bondsA type of "loan" that an investor provides to a government or company in exchange for repayment of the principal plus interest., to protect the accumulated money from sharp declines shortly before retirement.
5. What happens when you change jobs?
Moving between jobs is a natural part of a career, but it can scatter your money and create disorder in your pension savings:
- Higher management fees: Opening several accounts without consolidating them can result in paying high management fees in every account.
- Losing track: It is easy to lose touch with old savings. Keep things organized, know where every shekel is held, and consider consolidating accounts when appropriate.
6. Annual checklist: five minutes once a year
A short check once a year can prevent mistakes that last for years.
Most of the information appears in your quarterly pension statement and payslip.
What should you check?
- Management fees: Am I paying more than the average shown in the statement?
- Investment track: Does it suit my age and the level of risk that is right for me?
- Insurance coverage: Does my disability and survivors' coverage suit my current family situation?
- Actual contributions: Do the amounts in the pension statement match the contributions shown on my payslip?
- Employees: Make sure contributions are made on the full relevant salary.
- Self-employed people: Check the amount actually contributed and the use of tax benefits with your accountant.
Compare and choose wisely
Before choosing a pension fundA savings vehicle based on mutual risk sharing that includes insurance coverage in cases of disability or death., it is worth using the table we created for you. It is based on data from the Capital Market Authority and lets you compare which funds delivered the highest returns with the lowest management fees.
In summary
Your pension amount is not predetermined. It is the result of small decisions and consistent management. People who monitor their savings and make adjustments can have a real influence on their standard of living in retirement. Your pension is not determined on the day you retire—it is shaped throughout your working life.