The Impact of Pension Schemes on Saving in Israel: Empirical Analysis

01/10/1996 |  Lavi Yaacov, Spivak Avia


Households' and private firms' savings constitute the main source of supply of capital in Israel. Saving for

retirement is a significant part of households' saving: saving for retirement through pension and provident

funds alone constitute 35 per cent of households' total savings. Saving for retirement has undergone major

changes in recent years. Pension funds owned by the Labour Union Movement and others declared deficits,

and this crisis created pressure to reform not only the funds themselves but also the framework for pension

saving generally. The Government, in concert with the Labour Union Movement has already decided the outline

of a new pension scheme, but pressure from various sources will probably lead to changes to it. The public

debate that followed the crisis raises several important issues that are the focus of current research projects

by the authors. In this study we concentrate on two issues: what is the economic situation of the elderly, and

what is the contribution of pensions under the current system to post-retirement income.

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