Israeli Divorce Law: Pension Payouts Simplified, But Some Savings Excluded

A new directive in Israeli divorce law allows for up to half of a former spouse's pension to be transferred directly to the ex-partner, streamlining the process that began with a 2014 law. This law aimed to simplify the division of retirement savings by creating a direct transfer from the pension fund to the former spouse, bypassing the need for mutual agreement. The directive applies to various pension products including old and new pension funds, budget pensions, and insurance policies.

However, the process is not automatic. The transfer is initiated only after the managing company or insurer registers a court order and notifies both parties within 14 days. Failure to register the order can lead to significant delays, leaving the entitled spouse dependent on the other's cooperation. A key omission from the law is the "karnat hishtalmut" (study fund), a common and often substantial liquid saving. Its division still relies on the traditional method: the saver withdraws their share and transfers it to the ex-spouse's bank account, a process outside the direct registration system and dependent on the fund's liquidity and cooperation.

The court order must include specific details: the court that issued it, the duration of the joint period, the separation date, and the transfer percentage. The former spouse, not the saver, must submit the registration request to each separate pension entity. Once registered, the note is attached to the account, even if the saver changes employers or moves funds. The maximum transfer is 50% of the savings accumulated during the joint period, which ends at the separation date.

In cases where pensions are already being paid out as annuities, the amount is split monthly. For budget pensions, the request goes to the Commissioner of Pensions, with the ex-spouse's share capped at half the annuity. A significant provision allows the former spouse to be eligible for survivor's annuity benefits in certain pension funds if the couple was married for at least 120 months, provided the court order specified this. If the saver dies before the note is registered, the former spouse has 30 days from the court ruling or death, whichever is later, to submit the request.