Free Pension Services Costly, Warns Israeli Insurance Expert

Eldar Portnov, owner of the BestSeller insurance agency, warns that "free" pension and tax services advertised on social media often come at a hidden cost. He questions who truly pays for these "free" services, emphasizing that professional knowledge, licenses, and experience are not free. Portnov highlights that the Israeli pension market has individuals posing as specialists without proper licenses.

He recounts a case where a client's late husband, advised by "specialists" to maximize his pension, chose a plan that failed to preserve his capital. Upon his death, over a million shekels intended for heirs went to the insurance company. Portnov stresses that pension choices are irreversible after the first payout, urging people to question the motives of "free" advisors who may represent specific companies' interests.

Another client faced significant tax implications due to a single incorrect entry on Form 161, which determines how severance pay (pitzuim) and other funds are handled. This error, costing tens of thousands of shekels, altered the tax status and benefits. Portnov also points out that public sector employees, like teachers and medical staff, can face high tax deductions (up to 47%) on employer grants (maanakim) if not properly included in tax planning.

Furthermore, he explains that a comprehensive retirement plan involves more than just pension amounts. Factors like social security benefits, other income, assets, spousal income, health, inheritance, future work plans, and major life events must be considered. Portnov concludes that pension planning is a lifelong financial project, and "free" services can be the most expensive, urging individuals to inquire about who is paying for the advisor's time and work.