Dividing Pensions in Israeli Divorce Settlements
Translated & summarized from Bizportal by baba
Dividing pension assets in Israeli divorces hinges on when funds were accumulated, with pre-separation savings considered joint property. Post-separation savings typically belong to the individual who continues to contribute, unless agreed otherwise. A court order for division is noted on the pension account, restricting withdrawals without ex-spouse consent. The process is governed by a 2014 law, with different rules for defined contribution and defined benefit plans. Couples can also offset pension rights against other assets, and obtaining an actuarial calculation before finalizing agreements is recommended.
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- Pension assets accumulated during marriage are generally considered joint property in Israeli divorces.
- Funds saved after the legal separation date usually belong to the individual who continues to save.
- A court order for pension division restricts withdrawals without the ex-spouse's written consent.
- Israel's 2014 law governs the division of pension savings between separating couples.
- Defined contribution and defined benefit pension plans are divided differently.
- Couples can offset pension rights against other assets like property.
- Obtaining an actuarial calculation before finalizing divorce agreements is advised.
Pension assets are among the most complex to divide during divorce proceedings in Israel, unlike easily liquidated assets like property or bank accounts. The fundamental principle is that funds accumulated during the marriage are considered joint property, while those accrued after the separation date, as legally determined, belong to the individual who continues to save, unless otherwise agreed. For example, a 55-year-old divorcing man with NIS 1.4 million in his pension fund, all accumulated during the marriage, may have to give his ex-wife approximately NIS 700,000 if her own pension savings are minimal and an equal division is sought. The situation changes if both partners have significant savings; if one accumulated NIS 1.4 million and the other NIS 600,000 during the marriage, the latter might receive a transfer of about NIS 400,000 for an equitable split of the combined savings. The final amount is subject to the specific agreement and actuarial calculations, which consider factors like the type of fund, insurance components, tax benefits, and the timing of accumulation.
A court order for pension division is noted on the account, and the managing body must inform both parties within 14 days. While this notation is active, any withdrawal, transfer, investment change, loan, or pledge requires the ex-spouse's written consent. Funds saved after the separation date, such as monthly contributions of NIS 3,500 by a man continuing to work until age 67, are generally considered his separate property. The ex-wife's share continues to accrue returns until it is transferred or paid out.
This mechanism is governed by Israel's 2014 law on dividing pension savings between separating couples. For defined contribution plans like new pension funds and study funds, savings can be split and transferred to a separate account. For defined benefit plans, such as budget pensions and veteran funds, division is based on future pension payments. Couples may also opt to offset pension shares against other assets, with one spouse receiving a larger share of the property and the other retaining more of the pension. It is advisable to obtain an actuarial calculation of all joint pension rights before finalizing a divorce agreement, as the difference between dividing existing balances and future pension commitments can be substantial.
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