Israel Ranks Second in OECD for Pension Fund Real Returns
Translated & summarized from Maariv by baba
Israel has been ranked second in the OECD for average real returns on pension savings, approximately 5.5% annually, according to a new OECD report. The study highlights Israel's success in expanding pension savings participation, with mandatory contributions boosting engagement by over 40 percentage points since 2008. This system reduces reliance on public funding for pensions. The findings add to Israel's growing international recognition for its strong pension system, previously noted by a Mercer index.
The story in 5 lines · by baba
- Israel ranked second in the OECD for average real pension savings returns of about 5.5% annually.
- An OECD report highlights Israel's success in expanding pension savings participation by over 40 percentage points.
- Mandatory pension contributions in Israel, introduced in 2008, are credited with increasing savings.
- Israel's pension system structure reduces reliance on public funding, easing budget and national debt burdens.
- The OECD findings align with a Mercer index that ranked Israel's pension system among the top five globally.
Israel has achieved a significant ranking within the OECD, securing the second position for average real returns on pension savings, reported at approximately 5.5% annually. This achievement follows a trend where Israel was recognized among the top three leading countries in the OECD by 2025. The findings are part of a comprehensive OECD report titled "Are We Saving Enough for Retirement?" which analyzes pension asset development from the early 2000s to 2025 across member nations and beyond. The report also examines the gap between accumulated savings and retirement needs, investments in sustainable practices by pension and insurance entities, and the impact of financial advice on retirement planning.
Israel is highlighted in the report as a prime example of expanding participation in pension savings. Mandatory contributions, introduced in 2008, are credited with increasing participation rates by over 40 percentage points, thereby broadening the population accumulating retirement funds. A key characteristic emphasized is the reliance on accumulated funds over an individual's working years. This structure reduces dependency on public funding for pension payments, thereby alleviating potential burdens on national budgets and debt, unlike systems heavily reliant on public financing.
Regarding contribution rates, Israel's figures are within the accepted range compared to other surveyed countries, neither exceptionally high nor low. This metric is distinct from investment performance, focusing on the amount deposited versus the returns generated by managing entities. Amit Gal, Head of the Capital Markets, Insurance and Savings Authority, connected these findings to other international recognitions, noting that the OECD report aligns with global acknowledgment of Israel's robust pension system. He referenced a recent Mercer index that ranked Israel's pension system among the top five worldwide. Gal stated that the report's data underscores the importance of the regulatory approach adopted by the Capital Markets Authority, which prioritizes public interest and the protection of citizens' rights.