Israeli Authorities Warn Against Fraudulent 'Lost Pension' Firms Exploiting Savers

In recent years, numerous Israelis have fallen victim to fraudulent companies falsely promising to locate "lost" pension funds and charging exorbitant fees for services that are either unnecessary or harmful. These firms often claim to find dormant pension accounts and demand up to 10% of the funds as a fee, even if the saver does not withdraw the money. One victim recounted being charged 15,000 shekels for locating a pension she was fully aware of, with no financial benefit in return.

Roi El-Ner, chairman of the Professional Boundary Committee at the Israeli Insurance Agents Bureau, described the widespread nature of this scam, noting that many victims are vulnerable populations such as freelancers and residents of peripheral areas. He explained that these companies operate illegally, exploiting gaps and jurisdictional disputes between enforcement agencies like the Capital Market Authority and the police, which often refer complaints back and forth without decisive action.

El-Ner emphasized that in Israel today, there are no truly "lost" pension funds. Citizens can independently access official government platforms such as the Pension Clearinghouse and the Ministry of Finance's "Money Mountain" website for a small fee to obtain comprehensive information on their pension assets. Private companies charging thousands of shekels for this service are essentially profiting from deception.

The financial damage caused by early pension withdrawals facilitated by these companies is severe and long-lasting. Early redemption results in loss of disability and work incapacity insurance, elimination of survivor benefits, and forfeiture of tax exemptions on retirement income. Additionally, some companies have been found to falsify employment termination documents to illegally withdraw severance pay, exposing clients to legal risks.

El-Ner also criticized social media influencers who irresponsibly encourage young people to withdraw pension funds and invest independently in the stock market, ignoring the protections and guaranteed returns embedded in pension funds. He urged savers who have been targeted by these firms to seek legal assistance and assured that insurance agents can issue legal warnings to stop these illegal practices. He concluded by stressing that no unlicensed entity should be allowed to handle pension funds, and savers must be vigilant to protect their financial futures.