1.3 Million Israeli Children Save in Default Plans Without Parental Choice
Translated & summarized from Mako by baba
Israel's "Savings for Every Child" program has amassed 25.4 billion shekels, but 1.3 million children save under default plans without parental choice, mostly second or later-born siblings. Despite significant accumulated profits, many parents do not double monthly deposits or select investment plans, limiting potential savings. Legislative changes shifted most accounts from banks to provident funds, which generally yield better returns. The program aims to reduce child poverty, but low parental engagement risks increasing economic gaps.
The story in 6 lines · by baba
- 1.3 million Israeli children save under default investment plans without parental choice, mostly second or later-born siblings.
- 37% of parents do not double the monthly 57-shekel deposit, limiting savings growth.
- In 2025, 25.4 billion shekels were saved with 3.85 billion in profits accumulated since 2017.
- Legislative changes in 2025 led to 98,119 bank savings closures, shifting funds to provident funds.
- Provident funds hold 84% of active savings plans and generally yield higher returns than banks.
- From 2026, monthly base deposits rise to 58 shekels, with parents able to double to 116 shekels.
Israel's "Savings for Every Child" program has accumulated 25.4 billion shekels since 2017, with a total profit of approximately 3.85 billion shekels, according to the National Insurance Institute's 2025 annual report. Despite these impressive figures, 37% of parents do not double the monthly deposit of 57 shekels, and 33% leave the investment plan selection to the National Insurance Institute, resulting in 1.3 million children saving under default investment tracks chosen without parental input. Alarmingly, 80% of children assigned default plans are second or later-born siblings, reflecting lower parental engagement for subsequent children.
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, a significant but not life-changing sum. The report highlights that parents of first-born children are more likely to actively choose and increase savings, while those with multiple children often forgo this, potentially costing families tens of thousands of shekels over time.
A legislative change in January 2025 allowed parents to transfer savings from banks to provident funds, leading to the closure of 98,119 bank savings accounts, mostly at Bank Hapoalim and Discount Bank. By the end of 2025, 84% of active savings plans were managed by provident funds, which have generally yielded higher returns than banks. The report cautions that reported profits vary due to accounting methods and do not directly reflect investment performance, which is better measured by capital market data showing average annual returns of 9.7% in higher-risk tracks.
From January 2026, the base monthly deposit increased to 58 shekels, with parents able to add an equal amount, doubling the monthly savings to 116 shekels. Parents face three key decisions: where to manage the savings (bank or provident fund), which risk track to select, and whether to double the deposit. The National Insurance Institute emphasizes the program's goal to reduce child poverty and increase social mobility, but low parental involvement, especially in larger families, risks perpetuating economic disparities the program aims to close.
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