Israel has nearly 5 million employed workers, and Globe’s coming series based on Hilan data aims to show how differently they fare across the labor market. The focus here is the country’s provident study fund, one of the biggest tax benefits available to employees and the self-employed, worth about 10 billion shekels in 2024, according to the Finance Ministry.
The benefit works through two main tax breaks, exemption from income tax on worker and employer contributions of up to 10% of gross pay, and full exemption from capital gains tax on the fund’s investment returns. The catch is liquidity, money can usually be withdrawn tax-free only after six years. Finance Ministry attempts to abolish or scale back the perk have repeatedly failed, partly because it is especially popular among upper-middle-class workers. Hilan data suggests it is close to a must-have for anyone earning above average pay.
At salaries up to 7,000 shekels a month, only 35% of workers have a study fund. Among those earning 7,000 to 10,000 shekels, coverage rises to 55%, and at 15,000 shekels and above it exceeds 90%, reaching 99% for those earning 30,000 shekels or more. Hilan Value CEO Prof. Assaf Aharoni said the fund has become “a strategic tool for recruiting and retaining employees,” and in knowledge-heavy sectors it is now effectively standard. He added that for employers, “the question is no longer whether to offer it, but how they can afford not to.”
The company cautioned that its figures come from workers in Hilan’s system, which may bias the sample toward large, organized firms rather than small businesses. Self-employed workers receive the benefit under different rules, including income tax recognition on deposits up to 4.5% of taxable income and annual ceilings of 13,206 shekels for income tax purposes and 20,566 shekels for capital gains tax exemption. Hilan said public-sector collective agreements often include the fund, as do health, education, security and cleaning jobs, while knowledge-intensive sectors and the hi-tech industry show the highest coverage.
In hi-tech, 95% of workers have the fund, followed by healthcare at 92%. Government-owned companies and local authorities also score highly because of collective agreements. By contrast, commerce, retail, security, manpower and nursing have the weakest coverage. The most common employer contribution is the maximum 7.5% of gross salary, with rates above 95% in hi-tech, healthcare, government companies, banking and cultural institutions. Seniority also matters, in education and academia coverage rises from 44% in the first year to 64% after three years, in retail from 9% to 28%, and in healthcare from 72% to 90% among longer-tenured workers.
