TPS: Israel Proposes Waiving Pension Contributions for Workers Under 40
Israel's National Economic Council proposes waiving employee pension contributions until age 40, easing financial burdens for younger workers.
Jerusalem, 14 September, 2026 (TPS-IL) — Israel’s National Economic Council has proposed eliminating mandatory employee pension contributions until age 40, while requiring employers to continue contributing in full during that period. Under the plan, employees would remain insured but would not have contributions deducted from their salary until turning 40, after which the current full contribution requirement would apply.
The proposal, based on research by economists Avi Simhon and Avraham Zofnik, found that many Israelis’ expected retirement pensions exceed their net income during working years, particularly in lower income brackets, while major expenses like child-rearing and mortgages are concentrated in early career years.
The change would be optional, allowing employees to continue contributing early if they choose.