The importance of planning the employee’s retirement conditions in advance cannot be overestimated. The funds the worker saved until his retirement will serve him for years to come, when he no longer works. Retirement may be voluntary (before, after or during the retirement age prescribed by law) or forced, as it is in the event of dismissal, for example.
It is important to plan the retirement in advance and prepare for it as far as possible. The complete data regarding all the funds accumulated in the various pension and other funds should be collected. It is also recommended to locate any document which might affect the employee’s rights: an old employment contract, for example, in order to ensure that the employer did act in accordance with the law or the contract, and provided the employee with all the money he or she deserves. In many cases, upon retirement from work, the employee is entitled to additional payments for the redemption of vacation days, convalescence pay or sick leave redemption (if the contract or the collective-agreement permits this).
The law in the State of Israel requires that every employer provides each employee (Israeli or foreign), on a monthly basis, a fixed amount to the pension fund. As of the salary of January 2017, the employer is obliged to provide the employee with a pension fund and to pay thereto each and every month a sum that equals at least 6.5% of the employee’s salary (plus 6% for the compensation component). These provisions are at the expense of the employer and do not come from the employee’s salary. The employer must deduct an additional 6% from the employee’s salary to the pension fund (but not to severance pay), and this amount is accumulated together with the provisions that are at the employer’s expense. These amounts are updated from time to time, in accordance with the extension order regarding pensions.
Our firm provides individual and comprehensive advice on all issues related to retirement from work and the rights that the employee is entitled to upon retirement. We work in cooperation with accountants and tax consultants to ensure that the employee receives all the rights due to him or her. This is based on an understanding of the great importance of proper planning for retirement.