# Israeli Pension Advisor

> Navigate the Israeli pension and savings system including pension funds (keren pensia), manager's insurance (bituach menahalim), training funds (keren hishtalmut), severance handling at Form 161, Tikun 190 post-60 deposits, and retirement planning. Use when user asks about Israeli pension, \"pensia\", \"keren hishtalmut\", retirement savings, \"bituach menahalim\", pension contributions, tax bene…

- **Type:** Skill
- **Install:** `agentstack add skill-skills-il-tax-and-finance-israeli-pension-advisor`
- **Verified:** Yes — security-reviewed for prompt injection and unsafe behavior
- **Seller:** [skills-il](https://agentstack.voostack.com/s/skills-il)
- **Installs:** 0
- **Category:** [Agent Skills](https://agentstack.voostack.com/c/agent-skills)
- **Latest version:** 0.1.0
- **License:** MIT
- **Upstream author:** [skills-il](https://github.com/skills-il)
- **Source:** https://github.com/skills-il/tax-and-finance/tree/master/israeli-pension-advisor

## Install

```sh
agentstack add skill-skills-il-tax-and-finance-israeli-pension-advisor
```

Requires the [AgentStack CLI](https://agentstack.voostack.com/docs/cli). Works with Claude Code, Cursor, and any MCP-compatible agent.

## About

# Israeli Pension Advisor

## Critical Note
This skill provides general pension INFORMATION. It does not replace consultation
with a licensed pension professional. Recommend professional advice for specific
decisions, especially: severance over ~100,000 NIS at job change; any decision
from age 55 onward; sale of a business, retirement bonus, or inheritance larger
than the remaining kitzbah-mezakah pool; cross-border relocation; divorce; and
when considering a Tikun 190 deposit (Step 7).

Note for users on the three licensed pension professionals:
- *Yoetz pensioni* (advisor, Pension Advisory Law 2005) -- fee-only, fiduciary, no commissions.
- *Sokhen pensioni* (agent) -- commission-paid by funds, sells products.
- *Meshavek pensioni* (marketer) -- commission-paid but owes a fiduciary duty on advice given.

For unbiased advice ask specifically for a yoetz pensioni.

## Instructions

### Step 1: Identify Savings Type
| Type | Hebrew | Purpose | Tax Benefit |
|------|--------|---------|-------------|
| Keren Pensia | keren pensia | Retirement + disability + survivors | Tax credit + deduction |
| Bituach Menahalim | bituach menahalim | Retirement (insurance-based, declining for new policies since 2013) | Tax credit + deduction |
| Keren Hishtalmut | keren hishtalmut | Medium-term savings (6 years) | Tax-free gains for employees |
| Kupat Gemel le-Tagmulim | kupat gemel le-tagmulim | General savings (historical, mostly closed to new deposits since 2008) | Various |
| Kupat Gemel le-Hashka'a (IRA) | kupat gemel le-hashka'a | Self-directed retirement savings (since 2016 reform) | Tax on withdrawal at marginal rate, or 15% real-gain if drawn as kitzbah at 60+ |
| Kupat Gemel le-Kitzbah (Tikun 190 vehicle) | kupat gemel le-kitzbah | Post-60 tax-shelter (see Step 7) | Full exemption as kitzbah, 15% real-gain as lump sum |
| Kranot Neemanot | kranot neemanot | Mutual funds (not pension) | Capital gains tax |

### Step 2: Mandatory Pension Contributions
Since 2008, all employees must have pension insurance. Average wage (BL §2 definition, 2026): 13,769 NIS/month. This is the base figure for nearly every pension ceiling. (The CBS "national average wage" published in the press is a different, higher number; do not substitute it.)

**Employee contributions:**
- **Employee:** 6% of salary
- **Employer pension (tagmulim):** 6.5% of salary (includes disability-insurance component up to 2.5%)
- **Employer severance (pitzuim):** 6% of salary (mandatory minimum); 8.33% under full Section 14 (see Step 6)
- **Total mandatory minimum:** 18.5% of salary
- **Comprehensive pension fund deposit ceiling:** 5,645 NIS/month (67,740 NIS/year, 2026) -- 20.5% of 2× average wage. This corresponds to a salary ceiling of 2× avg wage = 27,538 NIS/month. Contributions on salary above 27,538 NIS route to a supplementary fund (keren mashlima) or kupat gemel le-tagmulim.

**Pension contribution timing for new employees** (Mandatory Pension Expansion Order):
- Employee with existing pension at intake: contributions begin Day 1, paid retroactively after 3 months of work or end of tax year (whichever first).
- Employee without existing pension: contributions begin only AFTER 6 months of work, going forward. The first 6 months are NOT covered retroactively.

**Self-employed mandatory pension** (Mandatory Pension for the Self-Employed Law, 2016):
- 4.45% on net taxable income up to 6,884.50 NIS/month (half average wage)
- 12.55% on income from 6,884.50 to 13,769 NIS/month (full average wage)
- No obligation on income above full average wage
- Maximum annual mandatory obligation: ~14,044 NIS
- Obligation applies between age 21 and legal retirement age
- The first calendar year of עוסק activity is exempt
- Obligation is on net taxable income (after deductions), not gross revenue. עוסק פטור and עוסק מורשה are both covered.

### Step 3: Keren Hishtalmut (Training Fund)
The most popular Israeli savings vehicle:

**For employees:**
- **Employee contribution:** Up to 2.5% of salary
- **Employer contribution:** Up to 7.5% of salary (total 10% of salary)
- **Tax-free salary ceiling for employer contribution:** 15,712 NIS/month (188,544 NIS/year, 2026). At the ceiling the combined contribution is 1,571 NIS/month.
- Employer contribution on the portion of salary above 15,712 NIS becomes taxable income to the employee, even though it still sits in the fund.
- **Withdrawal after 6 years:** Tax-free on gains (unique Israeli benefit)
- **Withdrawal after 3 years:** For accredited training only, with documentation

**For self-employed (two separate ceilings):**
- **Tax deduction from income:** Up to 13,203 NIS/year (4.5% of income up to 293,397 NIS)
- **Profit-exempt ceiling:** 20,566 NIS/year (gains on deposits up to this amount are tax-free after 6 years). The gap between the two ceilings can be deposited but yields no income-tax deduction.

**Note:** In September 2024 the Treasury proposed eliminating keren hishtalmut tax-free status for gains beyond year 6. As of May 2026, no such change has been enacted; the benefit remains in place. Monitor for renewed legislative proposals before assuming long-term stability.

### Step 4: Tax Benefits Summary

**For employees:**
- **Pension tax credit:** 35% credit on employee contributions up to 679 NIS/month (7% of qualifying salary 9,700 NIS, 2026). Maximum credit ~2,852 NIS/year.
- Contributions above 679 NIS/month earn deduction, not credit, up to the further deduction ceiling.
- **Employer exclusion:** Employer's pension contribution is not taxed as employee income (combined up to 7.5% of salary).

**For self-employed:**
- Tax credit (35%) on contributions up to 12,804 NIS/year (5.5% bracket)
- Tax deduction on contributions up to additional 25,608 NIS/year (11% bracket)
- Combined maximum deductible: 38,412 NIS/year (16.5% of qualifying income up to 232,800 NIS/year, ~19,400 NIS/month)

**Pension payout (at retirement):**
- Monthly pension partially tax-exempt under Tikun 190 (Amendment 190 to the Income Tax Ordinance, 2012)
- 2026 exemption rate: 57.5%; rising to 62.5% in 2027 and 67% from 2028 (schedule on track as of 2026)
- Tax-free pension amount: up to 5,422 NIS/month (2026)
- Qualifying pension threshold (kitzbah mezakah): 9,430 NIS/month
- Lifetime tax-exempt capital pool (kibua zechuyot / yitrat hahon haptura) = 180 times the monthly tax-exempt pension = 180 × (57.5% × 9,430) = 180 × 5,422 ≈ 976,000 NIS for a worker retiring in 2026 (it grows as the exemption rate climbs toward 67% by 2028). Eaten by severance withdrawn under heichum kitzbah at 1.35x per shekel (see Step 6).

### Step 5: Withdrawal Rules
- **Pension:** Men age 67; women in 2026 age 63 years 3 months, rising 3-4 months per year to 65 by 2032 per the Retirement Age Amendment (2021). Exact age depends on year of birth; for women born 1960-1965 the per-cohort table must be checked, not a flat number.
- **Three distinct retirement ages in Israeli law:** gil zakaut le-kitzbah (60+, early access with conditions); gil prishah (67/63+); gil prishah chovah (67 for both genders, the maximum age at which an employer can require retirement). Do not conflate.
- **Early pension withdrawal:** 35% withholding on tagmulim or marginal rate, whichever higher. Early withdrawal of severance beyond the exempt ceiling is taxed at the marginal rate (up to 47%, plus surtax). Exceptions for disability, low household income, or terminal illness can reduce or remove the tax.
- **Keren hishtalmut:** After 6 years (tax-free on gains), or 3 years (accredited training only, with documentation). Early withdrawal taxes the GAINS at the marginal rate, not the full balance.
- **Severance (pitzuim):** On termination, subject to the Section 14 arrangement and the Form 161 process. Tax-exempt up to 13,750 NIS per year of service. See Step 6 in full before any withdrawal decision.
- **Disability:** New comprehensive pension funds under the unified regulations (takanon achid, June 2018) pay up to 75% of insured salary for disability. Bituach Leumi nechut klalit may overlap; offset rules apply per the takanon achid. The disability premium is built into the 6.5% employer tagmulim, up to 2.5% of salary; if the employee opts out of disability coverage that premium is added to the savings component.
- **Survivors (sha'arim)** under takanon achid for an ACTIVE member: spouse 60% of insured salary; orphans combined 40% of insured salary (divided among children under 21, extended to 24 during military / national / regular national service); dependent parent 20%; total cap 100% of insured salary. For an INACTIVE member, the benefit is calculated from the accumulated balance using actuarial coefficients, not fixed percentages. Bituach Leumi shaerim STACKS on top of this; it is not an offset.
- **Nayadut (fund transfer):** No transfer fees. The new fund must complete the transfer within 10 business days of receiving the signed request. Vetek (seniority) is preserved for the keren hishtalmut 6-year lock. Transferring from a pre-2013 bituach menahalim to a pensia fund forfeits guaranteed annuity factors (mekadem hamara mubatach) on those balances; check before transferring.

### Step 6: Severance at Termination (Form 161)
The single most consequential decision at job change. Mistakes here cost tens of thousands of NIS in future tax.

**Heichum kitzbah:** the critical interaction users miss.
- Pension payouts at retirement are partially tax-exempt (57.5% of kitzbah mezakah in 2026, rising to 67% by 2028).
- Each shekel of tax-exempt severance withdrawn WITHIN 32 YEARS BEFORE legal retirement age reduces the lifetime kitzbah-mezakah tax-exempt pool by 1.35 shekels. Severance withdrawn MORE than 32 years before retirement does NOT reduce the pool, so for very young workers (under ~30) the heichum penalty is zero.
- The 1.35x applies only to the tax-exempt portion of severance (up to 13,750 NIS/year of service). Severance drawn above the exemption ceiling is taxed marginally at the time of withdrawal and does not borrow from the kitzbah pool.
- Worked example: a 40-year-old (27 years to retirement at 67) withdrawing 50,000 NIS of tax-exempt severance loses 50,000 × 1.35 = 67,500 NIS of future tax-exempt pension allowance. A 28-year-old (39 years to retirement) doing the same loses zero (outside the 32-year window).

**Section 14 (4 real-world sub-cases, per the אישור כללי of 30 June 1998 and amendments):**
1. Full 8.33% from day 1 on the full salary -- the textbook case; employer fully released from supplemental severance.
2. Section 14 on part of salary only (e.g. base, not bonus); the unfunded portion stays under the general law, calculated at final salary on termination.
3. Section 14 starting after a delay (no pension for the first months); employer owes the gap for the pre-Section-14 period at FINAL salary times years, indexed -- often the largest source of שלמת פיצויים claims.
4. Collective-agreement Section 14 (industry or Histadrut); bonuses, retroactive raises, and certain allowances may sit outside the arrangement and trigger residual severance liability.

The 2.33% gap arises only in case 1 if the employer chose to contribute the minimum 6% rather than the full 8.33% -- the employer owes the difference on termination at final salary.

**Forms involved (Form 161 was redesigned January 2024 as a single unified form):**
- **Form 161 -- Part A (Employer Notice)** -- Filled by the employer at termination, declaring employee details, employment period, salary, Section 14 status, and severance amounts paid out and accumulated in funds.
- **Form 161 -- Part B (Employee Notice)** -- Filled by the employee declaring intent for each component of severance: cash withdrawal (subject to heichum kitzbah), rezef-kitzbah (pension continuity), rezef-pitzuyim (severance continuity), or prisat pituyim (spread tax over up to 6 years). Part B REPLACES the old standalone Form 161א as of January 2024.
- **Form 161 -- Part C** -- Employer's calculation worksheet and instructions to the fund.
- **Default if Part B is not returned within ~10 business days of receipt: rezef-kitzbah (pension continuity), NOT auto-payout.** The Tax Authority treats a non-responding employee as having elected pension continuity if all severance funds are in annuity-eligible accounts. This is the opposite of the pre-2024 rule.
- **Form 161ג (161C)** -- Filed to REVOKE a prior rezef-pitzuyim election within 2 years of termination (the "bittul pituyim" window). Submitted directly to the Tax Authority.
- **Form 161ד (161D)** -- Filed at retirement to settle the lifetime kitzbah-mezakah exemption calculation against severance the employee took during their career (kibu'a zechuyot).

**Three options at termination (in order of common preference):**
1. **Rezef zechuyot (continuity)** -- Leave severance in the kupah, no tax event, no impact on future kitzbah-mezakah. Default best for younger workers with future retirement income. CAVEAT: only works cleanly if the new employer's severance contributions land in the same continuity arrangement; if the new employer has different terms or no pension yet, the rezef may not actualize and the severance sits frozen.
2. **Bittul pituyim (cancellation)** -- If severance was already drawn within the past 2 years, the employee can return it to the kupah with interest and indexation, with pakid shuma (assessment officer) approval, to restore the kitzbah pool. The original termination tax assessment is re-opened. Filed via Form 161ג.
3. **Prisat pituyim (spreading)** -- Spread severance taxation across up to 6 tax years to lower the marginal rate. Rule of thumb: 1 spread-year per 4 years of seniority, capped at 6. Only the taxable portion (above the petur ceiling) is spread; backward spreading exists but is rare and requires specific approval.

### Step 7: Tikun 190 Deposits (the post-60 tax shelter)
Tikun 190 of the Income Tax Ordinance (2012) lets people aged 60+ who already draw a qualifying pension (kitzbah mezakah) at least the minimum threshold (approximately 5,306 NIS/month in 2026) deposit lump sums into a kupat gemel le-kitzbah with a dramatically improved tax treatment.

**Why it matters:** Tikun 190 deposits are THE standard tax-shelter tool at retirement age for severance, retirement bonuses, sale of a business, inheritance, and surplus liquid savings. A retiree depositing 1M NIS of an inheritance into a kupat gemel le-kitzbah pays 15% real-gain tax on lump-sum withdrawal (vs marginal up to 47% in a regular brokerage account), and pays zero tax if the deposit is drawn down as a monthly kitzbah.

**Mechanics:**
- Qualifying pension prerequisite: the depositor must already receive a kitzbah of at least the minimum threshold (BL old-age pension counts; private pension counts; a partial kitzbah from a former employer counts). Without it, the deposit is treated as a normal kupat gemel le-tagmulim and the Tikun 190 benefit does not apply.
- Age 60+ at deposit time.
- No annual deposit cap, no lifetime cap (the benefit is on the tax treatment, not a contribution ceiling).
- Lock-up: funds must remain at least until the depositor is eligible for kitzbah (essentially immediately, given the prerequisite).
- Withdrawal as kitzbah: monthly payments fully exempt from income tax for life.
- Withdrawal as lump sum: 15% tax on the real (CPI-adjusted) gain only; principal is not taxed.
- Inheritance: on the depositor's death, the funds pass to designated beneficiaries; their tax treatment depends on the beneficiary's age and choice (kitzbah vs lump sum).

**Common confusion:** "Tikun 190" is used colloquially to refer to BOTH this 60+ deposit benefit AND the parallel reform of severance / kitzbah taxation under the same amendment. The two have nothing operational in common. When a client says "Tikun 190" ask which they mean.

**Triggers to recommend a yoetz pensioni consultation:** any planned Tikun 190 deposit over ~250,000 NIS, any consideration of withdrawing the deposit before 5 years, and any depo

…

## Source & license

This open-source skill is cataloged on AgentStack and links to its original source — we do not rehost the code.

- **Author:** [skills-il](https://github.com/skills-il)
- **Source:** [skills-il/tax-and-finance](https://github.com/skills-il/tax-and-finance)
- **License:** MIT

Install and usage instructions live in the source repository linked above.

## Pricing

- **Free** — Free

## Security capabilities

Automated source analysis of v0.1.0 — what this tool can access:

- **Network access:** no
- **Filesystem access:** no
- **Shell / process execution:** no
- **Environment & secrets:** no
- **Dynamic code execution:** no

*"Yes" means the capability is present in the source — more access means more to trust, not that it is unsafe.*


## Versions

- **0.1.0** — security scan: passed — Imported from the upstream source.

## Links

- Listing page: https://agentstack.voostack.com/l/skill-skills-il-tax-and-finance-israeli-pension-advisor
- Seller: https://agentstack.voostack.com/s/skills-il
- Browse the marketplace: https://agentstack.voostack.com/browse

---
Listed on AgentStack — the marketplace for AI agent skills and MCP servers. Every listing is security-reviewed. Creators keep 70%.