BOI Governor Flug for Higher Retirement Age, Higher Taxes

YERUSHALAYIM -

As Governor of the Bank of Israel-designate Dr. Karnit Flug prepares to take over the reins officially in a few days, her positions on various issues are being examined more carefully, and, as they are, some of the enthusiasm over her appointment may quickly die down.

For example, the incoming governor is in favor of raising the retirement age for women, as well as for men, according to Globes.

Over the past two years, the Ministry of Finance and the Bank of Israel have pushed for raising the retirement age for women from 62 to 64 and, in the future, gradually up to 67, which is the current retirement age for men.

“I think that the matter is also in alignment with the Minister of Finance’s decision to make the worker top priority,” adding that if the retirement age for women were not raised, they would face reduced pensions, due to the rise in life expectancy.

Flug is for raising the retirement age for men as well: “There is certainly room to consider the possibility of raising the retirement age for men, and at a certain point it will become necessary to raise it beyond 67. If we act on this matter early, we will be able to do so very gradually. Over the past few decades, the average life expectancy has risen one and a half years per decade, and this trend must be reflected in a dynamic process of raising the retirement age.

“The fact that there isn’t widespread support for raising the retirement age indicates, in my opinion, that there is a lack of awareness of the connection between retirement age and the personal and state pensions that we end up with. If the National Insurance Institute and the pension funds are not actuarially balanced, and if life expectancy rises and the retirement age does not, it will obviously lead to a reduction in these benefits; it is all one system.”

In an interview with financial journalist Sever Plocker last month, Flug took a severe tone on taxation, sounding much like the incumbent finance minister.

“We must tell the public the truth. Whoever wants high-quality public education, and a high-quality public health system, must be willing to pay for them with high income taxes. There are no miracles here.”

Regarding tax breaks for big companies, though, Flug made it clear she would not be joining any crusade against them:

“I also object to a situation in which multi-national companies pay zero taxes, but I am troubled by the stigmatization of the business sector, and I am even more troubled by the extremism and the demagoguery that have dominated the debate.”