Minister of Finance Dr. Yuval Steinitz announced this morning during a press conference that he intends to present in the coming weeks a proposal for implementing a law to insure that all workers have a pension plan.

The law memorandum, which was drafted by the supervisor of the Capital Markets, Insurance and Savings Department in the Finance Ministery, Yadin Entebbe, in conjunction with the President of the Israeli Association for the Self-Employed, Yehuda Talmon, is intended to widen the circle of Israeli citizens who save for the future. The self-employed sector of Israel does not always have pension plans, and finds it difficult to manage financially after retirement.

According to the law memorandum, beginning in the year 2011, every self-employed resident of Israel whose monthly income is more than half of the average salary in the job market, will be obligated to deposit money in a pension fund. During the first year, the self-employed will be required to deposit 4% of whatever earnings are above the half the average salary, and by the year 2015, the amount will increase to 20% a year. The law will apply to all self-employed individuals between the ages of 21 and 60, excluding those who are already receiving pension payments, or those who are also salaried workers.

In March 2007, the government submitted a proposal for a law stating that every worker in Israel is entitled to a pension plan. The Finance Ministry was supposed to set the pension terms which would apply to the different categories of workers that were not saving money in an employee initiated pension plan.

Once the law was approved, in November 2007, an agreement was signed by the various economic bodies involved in implementing the law, and the Isareli Workers Union, obligating all employees to set aside funds towards pension plans. On December 30, 2007, the Minister of Industry, Trade, and Labor drafted a new version of the law, which was to be implemented beginning in January, 2008, and which applied to all salaried workers in Israel. In 2008, an additional 300,000 Israelis joined the ranks of those who already had pension plans.

However, the self-employed sector of the population – a total of 11.7% of the Israeli workforce - were still without any definite plans for their financial futures. After taking into consideration the difficulty faced by low wage earners among the self-employed to set aside a large percentage of their monthly earnings towards pensions, as well as the fact that most of them would not have any source of income after retirement, the decision was made to obligate the self-employed to save a relatively small percentage of their salaries for their old age.