Expect a rush to open bank accounts in the coming weeks, as letters from the Finance Ministry go out to parents throughout the country outlining the government’s new savings plan for all children eligible to receive child allowance payments. In addition to the payments, which are made to parents in lieu of tax credits for expenses related to children, the state will also deposit NIS 50 per month in a bank account or pension savings plan for all children. According to estimates, the program will cost the state about NIS three billion a year.
The plan provides money for children from one day old through 18 years of age, and will be automatically allocated and sent to an account set up for children. Children whose parents do not open accounts for them will still receive the cash, but the accounts will be held by the Finance Ministry, with the money allocated in the name of the recipient. Parents also have the option of requesting that NIS 50 of their child allowance payment be transferred to their children, so that instead of saving NIS 600 per year, children will get credited with NIS 1,200 per year.
The program begins January 1, 2017, and children born after that date will receive an additional NIS 500 on their 18th birthday, for a total of NIS 11,300 or NIS 22,100 for those who save NIS 100 per month. At that time they will be allowed to withdraw their funds, but if they leave the money untouched until their 21st birthday, they will receive an additional NIS 500. The program is retroactive to May 2015, so essentially all children born after that date will receive the full funding. Children born before that date but who have not yet reached 18 years of age will receive the amount saved on their behalf from May 2015 through their 18th birthday.
Finance Minister Moshe Kachlon said that the plan “is an important step to reducing the social gap in Israel, and to advance the economic opportunities for children from all backgrounds. With this plan, all children have the opportunity to start their lives with more than NIS 20,000 in the bank, assuming the maximum savings through age 21. With this money, young people will be able to fund their education, open a business, or buy a home. This is the responsibility of the state and I am proud to be executing this plan. I call on all parents of eligible children to choose their savings plan and enable their children to take advantage of this benefit.”