Israel Faces 800 Billion Shekel Deficit in National Insurance Fund by 2035

Israel's National Insurance Institute is projected to face a staggering deficit of 800 billion shekels, double the cost of the recent war, according to economic analyst Gad Lior. This cash flow deficit arises because annual expenditures on social benefits exceed income, a situation expected to become palpable within a few years. The growing deficit is primarily due to increased life expectancy, which raises the total amount paid out in pensions and other benefits.

The National Insurance operates on a principle of mutual guarantee, where the working population pays monthly premiums to secure financial support in cases of old age, disability, or unemployment. This system aims to prevent a rapid descent from income loss into extreme poverty, thereby maintaining social stability. Millions of Israelis currently receive various benefits, and without this system, the number of impoverished individuals would be significantly higher.

While a reserve fund invested in special government bonds exists to cover shortfalls, it is expected to be depleted around 2035. At that point, the fund will no longer fully cover benefit payments, leading to reductions, especially in already low old-age pensions. However, payments will not cease entirely, and the government will need to make policy decisions to ensure continued support. Lior emphasized that a collapse of the National Insurance system is not possible, as such a failure would undermine the state's very existence.

The discussion was part of a daily news podcast by ynet, which also addressed conspiracy theories related to the October 7 attacks, highlighting how such narratives have become political tools.