National Insurance Urges Parents to Boost Children's Savings Accounts

Israel's National Insurance Institute (Bituah Leumi) has issued a call to parents via social media, encouraging them to review and actively manage their children's savings accounts under the "Savings for Every Child" program. The institute highlighted that by increasing monthly contributions and selecting appropriate investment tracks, parents can significantly boost the sums their children will receive upon reaching adulthood.

The program, active since January 2017, provides a monthly deposit of 58 shekels for each eligible child, in addition to regular child benefits. Parents have the option to double this monthly deposit by adding an equivalent amount, bringing the total to 116 shekels, which can be canceled at any time. The choice between a provident fund (Kupat Gemel) or a bank savings account, as well as the chosen investment track within these options, can substantially impact the final accumulated sum.

Illustrative figures released by the institute show significant potential differences. For instance, with a monthly deposit of only 58 shekels in a high-risk provident fund, a child might accumulate an estimated 63,178 shekels by age 21. However, doubling the deposit to 116 shekels monthly could potentially increase this to approximately 122,639 shekels, assuming average returns over five years from 2026. Lower-risk options and bank accounts yield considerably less, with a 58 shekel monthly deposit in a low-risk provident fund estimated at 23,951 shekels, and in a bank account around 21,000 shekels by age 21. Doubling the deposit in these scenarios would result in approximately 46,227 and 42,000 shekels, respectively.

Parents have six months from a child's birth to choose a savings vehicle; otherwise, a default mechanism is activated. If a family already has a child's savings in a specific type of account, a new child's savings will default to the same type. For first-time parents or those without a prior selection, savings will be deposited into a high-risk provident fund by default. Within provident funds, parents can select from low, medium, or high-risk investment tracks and can switch tracks or funds later. Bank savings offer various interest rate options, but changes and transfers are subject to specific plan terms.

Funds can be withdrawn from age 18 with parental consent, or from age 21 without it. An additional grant of 582 shekels is deposited if funds are not withdrawn by age 21, starting January 1, 2026. Different grant amounts are also provided based on the child's birth date, with those born before 2017 receiving a 582 shekel grant at age 18, and those born after 2017 receiving smaller grants at ages 3 and 13, plus the potential 582 shekel bonus if not withdrawn by 21.

Parents can manage their children's savings, adjust contributions, or change investment tracks via the National Insurance Institute's website, which also provides FAQs and explanations.