Israel Provident Fund (Kupat Gemel) Calculator 2025
Calculate Israeli provident fund (Kupat Gemel) growth for 2025. Employer may contribute up to 7% tax-deductible. Withdrawals after 6 years generally tax-free. Project fund value with annual return.
Enter your monthly employer contribution, annual investment return, and years to project your Israeli provident fund (Kupat Gemel) value for 2025.
Projected fund value
-
Total contributions
-
Investment growth
-
Fund value at end
-
Estimated monthly income (pot / 250)
-
Your breakdown
Updates live as you type
Item
Amount
How the Israeli provident fund (Kupat Gemel) tax benefit works
The Kupat Gemel is one of the most attractive tax wrappers available to Israeli savers because it combines two tax advantages. During the accumulation phase, employer contributions of up to 7% of salary are not taxed as income to the employee. This effectively allows employees to receive a tax-deferred salary supplement that is invested for them. At withdrawal, provided the account has been held for at least six years, the entire balance (contributions plus all investment returns) is withdrawn completely free of Israeli income tax and capital gains tax. This contrasts sharply with a regular investment account, where all capital gains are subject to 25% tax regardless of the holding period.
Comparing Kupat Gemel to direct investment
The tax-free withdrawal benefit of a Kupat Gemel makes it significantly more valuable than a regular investment account for medium-to-long-term savings goals. An account with a 5% annual return will compound identically in both vehicles during the accumulation phase, but on withdrawal the Kupat Gemel holder keeps all the gains tax-free while the regular account investor pays 25% on the gain. Over 20 years, a monthly contribution of 840 ILS growing at 5% annually produces a fund of roughly 340,000 ILS. If the same sum were in a taxable account, the 25% capital gains tax on the profit component would reduce the after-tax value by a meaningful amount. The longer the holding period, the more valuable the tax exemption becomes.
Flexibility and practical considerations
Unlike the compulsory pension fund, the Kupat Gemel imposes no requirement to convert the balance into a lifetime annuity. At any point after the 6-year qualifying period, the account holder can make partial or full withdrawals without tax, which makes the Kupat Gemel suitable as a medium-term savings vehicle for goals such as buying a home, funding education, or supplementing retirement income alongside the pension. Management fees in Kupat Gemel accounts are regulated and typically range from 0.5% to 1.5% per year on the assets, which reduces the effective return. Comparing fee levels across different fund managers is important for maximizing the net benefit of this savings vehicle.
Frequently asked questions
What is a Kupat Gemel (Israeli provident fund) and how does it work?
A Kupat Gemel (also called Gemelnet in its newer liquid form) is a savings and investment vehicle available to Israeli employees and self-employed individuals. Contributions go into a regulated investment fund that can invest in equities, bonds, and other assets. The key feature is that after a waiting period (generally six years from the first contribution), withdrawals are completely exempt from capital gains tax and income tax in Israel. This makes the Kupat Gemel one of the most tax-efficient medium-to-long-term savings tools available to Israeli savers. Employers can contribute up to 7% of the employee salary on a tax-deductible basis, and these contributions are not treated as taxable income to the employee.
What are the tax benefits of a Kupat Gemel in Israel?
The Kupat Gemel has two main tax advantages. First, employer contributions of up to 7% of the employee salary (up to the recognized salary ceiling) are deductible for the employer and are not treated as a taxable fringe benefit to the employee at the time of contribution. This means the employee effectively receives a salary top-up that is not immediately taxed. Second, after holding the account for at least six years, all withdrawals from the Kupat Gemel are exempt from both income tax and capital gains tax. This is in contrast to a regular investment account where capital gains are taxed at 25% in Israel. The combination of tax-free accumulation and tax-free withdrawal makes the Kupat Gemel structurally similar to a Roth account in other jurisdictions.
Can I access my Kupat Gemel before the 6-year waiting period?
Withdrawing from a Kupat Gemel before the 6-year qualifying period results in the loss of the tax-free status. Early withdrawals are subject to income tax on the gains (investment returns) at the full marginal rate, and the employer contribution component that was not taxed at contribution will also be taxed on withdrawal. The principal amounts contributed from after-tax employee savings may be withdrawable without additional tax, but the tax benefit is lost. Some specific exemptions exist for early withdrawal in cases of severe illness, disability, or other exceptional circumstances, subject to ITA approval. For most savers, maintaining the account for at least six years is strongly advisable to secure the tax benefit.
What is the difference between a Kupat Gemel and a comprehensive pension fund (Pension Muchletet) in Israel?
A comprehensive pension fund (Pension Muchletet) is the mandatory retirement savings vehicle that all Israeli employees must join. It provides a combination of retirement savings, disability insurance (Komah), and survivor insurance. Withdrawals from the pension fund must generally be taken as a lifetime annuity at retirement, though limited lump-sum options exist. A Kupat Gemel, by contrast, is a flexible savings vehicle with no mandatory annuity requirement. The account holder can withdraw the entire balance (after the 6-year qualifying period) as a lump sum or in installments, with full tax exemption. The Kupat Gemel does not include insurance components. Employees can hold both simultaneously: the mandatory pension for retirement income security and a Kupat Gemel for additional tax-efficient savings with flexibility.