Israeli Capital Market Authority Tightens Rules on Early Pension Withdrawals to Protect Savers

The Israeli Capital Market Authority, led by Commissioner Amit Gal, has introduced mandatory new measures for institutional bodies before approving any early pension withdrawal requests. These regulations, set to take effect within approximately three months, aim to ensure that withdrawals are made only with the explicit consent of the saver and after they fully understand the irreversible consequences. The move responds to a rising trend of public inducement to withdraw pension savings, often involving impersonation, forgery, and fraud, without adequately informing savers about the severe financial impacts.

Under the new rules, institutional entities must actively verify the validity and reliability of each withdrawal request. This includes confirming that the request originates from the saver, checking employment termination status when relevant, and authenticating official documents such as tax exemption approvals or inheritance certificates through reliable government databases. Only after completing these verifications will a withdrawal request be considered complete.

Additionally, institutions are required to proactively contact clients via phone or digital message for any unauthorized withdrawal requests before approval. This communication must include essential details about the withdrawal and the licensed professional handling the case. Explicit client approval is mandatory to confirm their understanding of the tax liabilities, loss of insurance coverage, and reduction in retirement benefits resulting from the withdrawal.

Commissioner Amit Gal emphasized the Authority's commitment to combating inducement practices and protecting savers' interests. He stated, "The inducement to withdraw pension funds, often accompanied by misinformation or half-truths, is among the most damaging phenomena and requires full cooperation from all market players to eliminate it. We will continue to collaborate with all stakeholders to safeguard the pension future of Israeli citizens."