National Insurance Fund Faces Collapse Without Major Reforms

Israel's National Insurance Institute is on the verge of collapse, with payments already exceeding revenue and its reserves projected to be depleted within a decade. Experts Yair Zimon and Oded Shurer warn that without significant structural reforms, the public will ultimately bear the cost through increased taxes, national debt, or reduced benefits.

The core issues stem from the institute's massive actuarial deficit, estimated in the hundreds of billions of shekels. To address this, the experts call for a comprehensive overhaul of investment policies, demographic assumptions, and the contribution base.

Specifically, they propose ending the current arrangement where the National Insurance Institute lends its surplus funds to the Ministry of Finance solely in exchange for designated bonds. Instead, they advocate for the establishment and management of an independent sovereign fund.

The authors emphasize that inaction is no longer an option, as the current trajectory leads directly to a financial abyss. The proposed reforms are crucial to prevent the fund's insolvency and ensure its long-term viability.