Israeli Treasury Criticizes National Insurance for Irresponsible Expansion of Social Benefits
Yael Lindenberg, Deputy Director of Budgets at the Israeli Ministry of Finance, sharply criticized the National Insurance Institute's (NII) generous allocation of social benefits, warning that the current policy of expanding entitlements without discrimination is unsustainable. Speaking at the first Wahl Conference by the Myers-Joint-Brookdale Institute in Jerusalem, she emphasized the urgent need to stop automatic benefit distribution to preserve resources for those truly in need. Lindenberg described Israel's welfare policy as facing its greatest challenge since the state's founding, with unprecedented demand for social services amid limited resources and workforce.
She highlighted specific examples, including the unrestrained increase in elderly classified as nursing-dependent, now one in three seniors in Israel compared to about 11% on average in OECD countries. Additionally, the number of children diagnosed on the autism spectrum has grown by 19% annually, driving a 25% yearly rise in related NII service expenditures. The ongoing war has also increased the number of terror victims and mental health service users. Demographic changes and low workforce participation, especially among ultra-Orthodox men, further threaten the long-term funding of these services.
Lindenberg noted the disparity in National Insurance contributions, where an average salaried worker pays about 6,000 shekels annually, while a yeshiva student pays less than 600 shekels. She called for courageous policy decisions, including the willingness to say "no" to some demands to maintain the welfare state's sustainability for future generations.
A recent State Comptroller report criticized the tripling of the nursing care budget from 7 billion shekels in 2018 to 21 billion in 2025, attributing most of the increase to eligibility based solely on medical documents without in-person dependency assessments. The report warned this policy endangers the actuarial stability of the NII, advancing its insolvency date by over six years to 2035.
In response, the NII stated that National Insurance contributions are social insurance funds paid by Israeli residents, with entitlements established by governments based on real needs. The NII stressed its responsibility to ensure rights are granted as a matter of entitlement, not charity, quoting Golda Meir on the foundational social principles of the National Insurance Law.
Former NII CEO Meir Spiegler, now CEO of the Israel Electric Corporation and chairman of the NII council, defended the expansion of benefits, saying previous reports criticized dependency checks and recommended relying on documentation. He argued that the increase in benefits reflects correcting past underpayments and that he is proud of ensuring people receive what they deserve.
