Project your Israeli compulsory pension pot. Employee 6%, employer 6.5% plus 8.33% severance. Compound growth over your career. Estimate monthly pension income at retirement.
Enter your monthly salary and years to retirement to project the size of your Israeli compulsory pension pot and estimated monthly income.
Projected pension pot
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Employee total contributions
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Employer total contributions
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Investment growth
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Est. monthly pension income
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Your breakdown
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How Israeli compulsory pension works
Since 2008, Israeli law requires all salaried employees to participate in an approved pension plan. The employer must contribute at least 6.5% of the employee’s salary as a pension contribution plus 8.33% as a severance (Pitzuim) component, totaling 14.83% from the employer. The employee must contribute at least 6%. These contributions go into a licensed pension fund (Keren Pensia Hadasha) which invests them in a diversified portfolio. Government bonds and equities are typical allocations. The accumulated pot at retirement is converted into a lifelong monthly annuity based on actuarial tables.
Worked example: 15,000 ILS salary for 30 years at 5 percent return
Employee monthly contribution: 6% of 15,000 = 900 ILS. Employer monthly contribution (pension + severance): 14.83% of 15,000 = 2,224.50 ILS. Combined monthly: 3,124.50 ILS. Over 360 months at 5% annual return, the fund grows to approximately 2.6 million ILS. Total contributions are about 1.12 million ILS and investment growth accounts for roughly 1.5 million ILS. Dividing the pot by 240 (a conservative 20-year drawdown period) gives an estimated monthly pension of about 10,800 ILS. Actual income from the fund depends on the specific pension fund and its annuity tables.
What this calculator does not cover
This projection assumes constant salary throughout the career, which understates typical outcomes since most careers involve salary growth. It does not model salary growth, contribution ceiling limits, fund management fees (typically 0.5% to 1% annually), insurance riders within pension policies, or the tax treatment of pension income at retirement. The monthly income estimate uses simple division by 240 and does not apply actuarial mortality tables. For a formal pension projection, request a pension statement from your fund or consult an Israeli pension advisor (Yoetz Pensiya) licensed by the Capital Markets Authority (Rasham HePensiot).
Frequently asked questions
What are the mandatory pension contribution rates in Israel in 2025?
Under the Mandatory Pension Law 2008, employees must contribute a minimum of 6% of their salary into a pension fund and employers must contribute 6.5% plus an additional 8.33% as a severance (Pitzuim) component. The combined minimum contribution is therefore 20.83% of salary (6% employee plus 14.83% employer). Many employment agreements exceed these minimums. The contributions are made into a licensed pension fund (Keren Pensia), insurance policy (Bituach Menahalim), or provident fund (Keren Hishtalmut-type). Pension contributions receive tax deductions: employee contributions are deductible up to 7% of salary (up to 2.5 times the average wage).
At what age can I withdraw my Israeli pension?
The standard retirement age in Israel is 67 for men and 65 for women (with planned equalization to 67). Pension savings can generally be accessed as a monthly annuity from retirement age. Early withdrawal before retirement age is heavily penalized and the severance component (8.33%) may be subject to separate rules. Lump-sum withdrawal is restricted and the remaining balance must be annuitized or kept for income purposes. The 2008 law significantly tightened early access compared to earlier provident fund arrangements.
How is monthly pension income calculated in Israel?
Monthly pension income from a Keren Pensia (pension fund) is calculated as the accumulated pot divided by an actuarial annuity factor. The annuity factor depends on age at retirement, gender, and the fund’s actuarial tables. A common approximation is to divide the total pot by 200 to 240 (representing an expected drawdown period of roughly 16 to 20 years). This calculator uses a simple division by 240 (20 years) as a conservative estimate. Actual monthly income from a pension fund will differ based on fund performance, mortality assumptions, and any guarantee periods elected.
Are Israeli pension contributions tax deductible?
Yes. Employee pension contributions are deductible for income tax purposes up to 7% of salary, capped at salary equal to 2.5 times the average wage (approximately 39,280 ILS per month in 2025). Contributions above this level receive no additional deduction. Employer contributions are not included in the employee’s taxable income up to the same ceiling. Investment gains within approved pension and provident funds accumulate without annual capital gains tax, though the pension annuity withdrawals at retirement may be subject to income tax depending on age and contribution history.