Gov’t to Establish National Savings Plan for Kids

YERUSHALAYIM -
View of the National Insurance Institute in Jerusalem. November 21, 2013. Photo by Meital Cohen/FLASH90
The National Insurance Institute in Yerushalayim. (Meital Cohen/Flash90)

Pension funds for adults are nothing new, but the National Insurance Institute will begin a new program in January – a monthly “pension fund” allocation for Israelis 18 and under. The money will be invested in an account managed by the NII, although parents will be able to switch from investments that are not high-yielding enough. The money will belong to the grown child when s/he reaches 18.

Establishment of the fund was a coalition condition for both United Torah Judaism and Shas. Commenting on the project, Finance Minister Moshe Kachlon said that it was “an important step in the reduction of the social gap in Israel, and in expanding equality. As a result of the program, youths who reach age 18 will have NIS 20,000 ($5,200) in hand, with an opportunity to build their future.”

According to Deputy Finance Minister Rabbi Yitzchak Cohen, access to the money “without regard to the financial state of a youth’s parents will bring growth and reduce poverty and social gaps, and enhance the equality of opportunity for all Israelis.”

Under the plan, the NII will deposit NIS 50 per month per child. At age 18, the child will receive a NIS 500 bonus, but if the account owner chooses to keep their money in the account until age 21, they will continue to build savings and receive an additional NIS 500 bonus. The state will be responsible for administrative costs associated with the accounts. The program is expected to cost the state NIS 2.65 billion ($690,000) a year.