Provident Funds

Legacy Provident Funds – Until 2008, provident funds were intended for capital savings, meaning they allowed funds to be withdrawn as a tax-exempt lump sum rather than as a monthly pension. These include funds for salaried employees, where all deposits made until the end of 2007 are liquid for withdrawal as a lump sum starting at age 60, and funds for self-employed individuals, where deposits until the end of 2005 are liquid for withdrawal as a tax-exempt lump sum after 15 years of tenure. Deposits from 2006 to 2007 are liquid for withdrawal as a lump sum starting at age 60. All deposits from 2008 onward to these funds are designated solely for pension purposes, and the funds cannot be withdrawn as a lump sum.

Since 2008, the operation of the legacy provident funds has changed, and new provident fund products have emerged:

• Provident Funds under Amendment 190 – Starting in 2012, these allow senior savers to manage liquid savings, subject to meeting certain criteria. These provident funds are taxed at a 15% nominal capital gains tax in the case of withdrawal as a lump sum or are tax-exempt if withdrawn as a pension starting at age 60.
• Investment Provident Funds – Starting in 2016, these can be managed at any age, with the option for a tax-exempt pension starting at age 60, subject to an annual investment limit of ILS 83,641  (as of 2026) per calendar year.

Transferring between provident funds is possible while preserving the term and liquidity of the savings. The transfer process will be completed within 10 business days from the date the request is received by the selected institution.

For provident funds for salaried employees that include a severance pay component, when transferring to another fund requested by the saver, the transfer will be made with the severance pay component allocated to an investment track suited to the saver’s age (based on the Chilean model). If the member includes an employer’s confirmation regarding severance pay funds with the transfer request documents, these funds will also be transferred to the requested investment track.

Guy Mani, our chief investment manager for provident funds, leads a team of highly experienced analysts and investment experts who make ongoing decisions.

At the same time, Meitav Pension and Provident Fund Ltd. operates an investment committee that meets every two weeks to set the investment policy for each track in the funds. The committee includes economists with decades of experience in the capital market.

Of course! Flexibility is key in investments. Therefore, you can split your funds and/or deposits among the various tracks in Meitav’s provident funds.

The amendment to the law stipulates that deposits to provident funds, pension funds and executive insurance plans made after January 2008 are intended to provide the saver with a lifelong monthly pension. From this point onward, the pension market includes two products: “provident funds for pensions” and “provident funds for savings that do not pay a pension.”

Funds accumulated in a provident fund up to December 2007 can be withdrawn starting at age 60, tax-exempt, provided the fund has at least five years of saving. Withdrawal of non-liquid compensation funds incurs a 35% tax on the benefit funds.

Severance pay funds can be withdrawn upon termination of employment. Severance pay funds can be withdrawn in accordance with the Severance Pay Law, 5723-1963. Compensation funds can also be withdrawn as a pension after being transferred to a pension-paying provident fund.

If you have accrued rights to receive a pension exceeding the minimum amount set (ILS 5,306 as of 2026, you can capitalize the difference and withdraw it as a lump sum. The withdrawal is subject to the approval of a tax assessor.

* Amendment 3 to the Supervision of Financial Services (Provident Funds) Law, 5768-2008.

Most of the public does not professionally manage investments and is not well-versed in market and sector analysis, financial statement analysis of companies, or macroeconomic analysis, all of which are fundamental to professional investment management. Pension savings products are managed for a large number of clients, and to allow maximum customization to each client’s preferences, provident funds offer a wide range of investment tracks, from very conservative tracks to more speculative ones.

Loss of a saving period? Not at all! A saver in a provident fund accrues the term from the date of the first deposit to the account. Splitting the funds between tracks does not affect the term or the start date of liquidity. In fact, it is still one account, simply divided into multiple tracks. You can transfer any amount you choose.

You can easily join digitally from any device at any time and open or transfer a provident fund. To enroll, click here.

Absolutely. This can be done by filling out a form. A person who has accumulated funds in one track and wishes to transfer funds to another track within the same provident fund can fill out an internal fund transfer form and the request will be processed within three business days.