Retirement and savings in Israel

The question is not “which fund returned +12% last year”. It is: fill the wrappers in the right order, then pick an investment track (מסלול) that matches the horizon. Until the training fund (קרן השתלמות) is at the ceiling, a money-market fund (קרן כספית) “to invest” is usually too early.

1. 1

   The pension — the largest flow

   18.5% of determining pay, once it starts. Without a still-active Israeli fund, nothing for 6 months — not caught up. A 401(k), IRA or PER does not count. You do not choose whether to contribute: you choose the fund and the investment track (מסלול). Stay silent and the employer parks you in their default.

   Why — This is the largest flow, until retirement. A track that is too cautious for thirty years costs more than a 0.1% fee.

2. 2

   Negotiate and fill the training fund (קרן השתלמות)

   Often 2.5% / 7.5%, up to the 2026 ceiling (392.8 ₪ + 1,178.4 ₪ a month). Get it in the contract. If it is not written, it does not exist.

   Why — Still one of the few Israeli wrappers where deposits and gains are tax-free at six years. The 7.5% employer slice will not appear in a provident fund (קופת גמל) you open alone.

3. 3

   A reserve in money-market fund (קרן כספית)

   Three to six months of expenses, liquid. Not the current account near 0%. Not the pension.

   Why — Without it, the first shock (deposit, a month without pay) empties training fund (קרן השתלמות) too early, with a possible 47% withholding.

4. 4

   The leftover each month

   Investment provident fund (קופת גמל להשקעה) (ceiling 83,641 ₪ per person, annuity possible from 60) — or, if you are a US citizen, often a foreign broker: an Israeli fund can be a PFIC. See the IBKR guide.

   Why — Only here do you “invest extra”. Before that, you were filling wrappers the tax office treats better.

5. 5

   Do not empty 1 and 2 to “invest better”

   Drawing training fund (קרן השתלמות) or severance (פיצויים) for a down payment, a sofa or a brokerage account destroys the wrapper. A loan against training fund (קרן השתלמות) exists, without breaking seniority.

   Why — A banker who offers to “transfer” into a house product is often selling less tax benefit, not a sure higher return.

An Israeli salary does not feed “a savings account”. It can fill up to four pots, each with its own rules. Mix them up and you withdraw too early — or pay 47%.

Who to call, which form, who sends the money. This is not a fund ranking. Most fund sites are in Hebrew. An agent (סוכן) is not required — they are paid on commission.

“Where to invest in Israel” on a salary mostly means: which fund, which investment track (מסלול), at what fees — not which stock to buy. You choose. The employer executes.

The tracks, in plain words

The investment track (מסלול) is the real lever once the wrapper is chosen. This is not a ranking.

Same fund, same logo, two clocks. The training fund (קרן השתלמות) you may want for a down payment in six years does not share an investment track (מסלול) with a pension until retirement age (67 for men; women’s age is not the same, and it is still moving).

First Israeli job. The training fund (קרן השתלמות) does not appear by itself: it is in the contract, or it does not exist. The pension is mandatory — but without a still-active fund here, it waits 6 months.

1. 1Read the contract before you sign

   Pension: mandatory. The training fund (קרן השתלמות): negotiate it, unless a sector order already covers you. If it is not written, it is not paid.

2. 2Pick your pension fund

   Compare on Pensya-Net (פנסיה נט). Join directly with the fund (or via an agent (סוכן)). Ask for Appendix V (נספח ו׳) and give it to payroll. Without it, the employer deposits into their default.

3. 3Check the payslip at month 3 or 6

   No still-active Israeli fund (a 401(k), IRA or PER does not count): nothing for 6 months, not caught up, then 18.5%. Still-active fund here: from day one; the first transfer is often at month 3, backdated.

4. 4Hunt leftover accounts

   Har HaKesef (הר הכסף) lists pension, training fund (קרן השתלמות) and provident fund (קופת גמל) in your name. An Oleh who changes jobs twice often leaves an orphan fund.

Under the expansion order, every employee (men from 21, women from 20) is entitled to pension insurance. From the January 2017 salary, the total is 18.5% of determining pay: 6% from you, 6.5% employer (contributions (תגמולים)) and 6% employer (severance (פיצויים)). You cannot waive it.

This is the envelope Olim hear about most — and mix up most. It is not a pension. It is not mandatory for most employees. It is a six-year savings pot with a tax break almost no other Israeli product still offers at mid-horizon.

“Provident fund (קופת גמל)” on a payslip is not always “investment provident fund (קופת גמל להשקעה)” at the bank. One is a retirement vehicle. The other is a liquid savings wrapper with a yearly ceiling.

A shekel money-market fund. Widely used once current-account yields stayed near zero. It is not a pension, not training fund (קרן השתלמות), not a provident fund (קופת גמל).

The payslip (תלוש) is the only place to see whether the money actually leaves. Not the contract, not an HR promise.

An Oleh who stacks two contracts often leaves an orphan fund. The clock keeps running — if you do not withdraw.

An exempt self-employed (עוסק פטור) or licensed self-employed (עוסק מורשה) has no employer to “handle the funds”. Three lines. Do not merge them.

This page is about Israeli funds fed by a salary or a self-employed person (עוסק) here. The other stack — 401(k), IRA, PER, French pension, Social Security, State Pension — is a different page.