Israeli Pension and Savings Deposits Surpass $55 Billion Milestone

Deposits into long-term savings accounts in Israel reached a record high in the past year, exceeding 219 billion shekels (approximately $55 billion USD). This marks the first time public deposits have surpassed the 200 billion shekel threshold in a single year, representing a 12.3% increase from the previous year. The funds were allocated across various accounts, including pension funds (91 billion shekels), savings policies (34 billion shekels), study funds (39 billion shekels), and investment provident funds (19 billion shekels).

While deposits surged, withdrawals also increased by 9.8% to 155 billion shekels, resulting in a net inflow of 64 billion shekels into institutional entities. Notably, withdrawals from study funds decreased by 6% to 20.1 billion shekels, despite overall asset growth. The total value of long-term savings accounts grew by 16% to 3.3 trillion shekels, largely driven by significant market returns of 15% in general tracks and 25% in equity-focused tracks.

This asset growth has boosted the profitability of insurance companies and investment houses, which benefit from increased management fees without a proportional rise in operational costs. Despite the overall increase in assets under management, management fees have seen a slight decrease. Pension fund management fees on deposits fell to 1.54%, while fees on accumulated savings remained stable at 0.15%. Average management fees for provident funds and study funds on accumulated assets were 0.53%.

Insurance agents have also significantly benefited, with their numbers growing by 3.5% to 13,400 agents. Commissions paid to agents rose by 10% to 13.2 billion shekels annually, a 46% increase since 2020. A substantial portion of agents earn between 250,000 and over 1 million shekels per year.

Amit Gal, the Supervisor of the Capital Markets, Insurance and Savings Authority, highlighted the evolving role of institutional entities in Israel's economy, emphasizing their transformation from traditional financial managers to key economic players. He stressed the importance of strong corporate governance to ensure these entities act as professional investors prioritizing savers' long-term interests.