The Obligation
Since 2008 (expanded in 2017), every employer must contribute to a pension fund for every employee from the first day of employment. The rates are: employer pension contribution 7.5% of salary, plus employer severance contribution 8.33% of salary (total employer: 15.83%). The employee contributes 7% of salary. Total: 22.83%.
Pension Contribution Rates (2026)
| Component | Employee | Employer |
|---|---|---|
| Pension (tagmulin) | 7.0% | 7.5% |
| Severance (pitzuim) | — | 8.33% |
| Total | 7.0% | 15.83% |
Example
Employee earning ₪15,000/month:
Employee pension: ₪15,000 × 7% = ₪1,050
Employer pension: ₪15,000 × 7.5% = ₪1,125
Employer severance: ₪15,000 × 8.33% = ₪1,250
Total monthly pension deposits: ₪3,425 (₪41,100/year)
Over a 30-year career at this salary: ~₪1.23M in pension savings (before investment returns).
בסיס חוקי
- Mandatory Pension Arrangement Directive 2008
- Extension Order 2017 – Updated contribution rates
Important Note: The information on this website is for general informational purposes only and does not constitute professional tax advice. Consult a qualified tax advisor before making financial decisions.