1.3 Million Israeli Children Save in Default Plans Without Parental Choice

Israel's "Savings for Every Child" program, active since 2017, has accumulated 25.4 billion shekels across 3.63 million savings accounts, generating a total profit of approximately 3.85 billion shekels by the end of 2025. However, a significant portion of parents, 37%, do not double the monthly deposit of 57 shekels, and nearly half fail to select an investment track for their child's savings, leaving 1.3 million children in default investment plans chosen by the National Insurance Institute rather than their parents.

The most concerning finding is that 80% of children assigned default plans are second or later children in their families, reflecting lower parental engagement compared to firstborns. Deputy CEO of the National Insurance Institute, Tzvika Cohen, emphasized the need for greater parental involvement, especially for younger siblings, to increase savings that could amount to tens or hundreds of thousands of shekels by adulthood.

In 2025 alone, about 3.56 billion shekels were deposited, with 70% coming from the state and 30% from parents' additional contributions. The average payout upon maturity was around 8,600 shekels per child, which, while helpful, is not transformative. The program also paid out 433,000 grants totaling 193.3 million shekels to children reaching ages 3, 18, and 21.

A legislative change in January 2025 allowed parents to transfer savings from banks to provident funds, leading to the closure of 98,119 bank accounts in one year. Bank Hapoalim experienced the largest outflow, losing over 40,000 accounts. By the end of 2025, only 16% of active accounts remained in banks, with 84% in provident funds, which generally yielded higher returns.

Investment returns vary widely by fund and risk level, with high-risk tracks averaging 9.7% annual returns over eight years. Parents who actively choose higher-risk tracks and double contributions can multiply their child's savings by four to five times compared to default plans. The National Insurance Institute aims to reduce child poverty and increase social mobility, but low parental engagement, especially in larger families, undermines these goals.

Starting January 2026, the base monthly deposit will increase to 58 shekels, with parents able to add another 58 shekels, doubling the potential monthly savings to 116 shekels. Parents have six months from a child's birth to select the investment track, and transfers between funds or tracks can be made anytime without fees. The program's success depends heavily on parental involvement to maximize benefits for children.