As of 2017, Atzmaim (self-employed) are obligated to make pension contributions. In addition, they are entitled to other social benefits such as Keren Histalmut. The breakdown of contributions for the 2018 tax year can be found below.
How much am I obligated to contribute?
The income upon which one is obligated to contribute is split into 3 tiers. All of which are based on the Schar Memutza BaMesheq – שכר ממוצע במשק. This is the defined ‘average’ gross salary in Israel. The average gross salary for 2018 is 9,906 NIS (as publicized by Bituach Leumi).
The 3 tiers are:
- Half the Schar Memutza BaMesheq.
- The 2nd half of the Schar Memutza BaMesheq.
- Anything above the Schar Memutza BaMesheq.
|Average monthly income|
(based on January 2018 data)
|Minimum legal contribution (%)||Minimum Legal Contribution (NIS)|
|0 NIS – 4,953 NIS||4.45% of the average monthly income||Up to 220 NIS per month (based on 4,953 NIS x 4.45%)|
|4,953 NIS – 9,906 NIS||4.45 % of income up to 4,953 NIS, and 12.55% of income earned above 4,953 NIS||Up to 842 NIS per month (based on 4,953 NIS x 4.45% and 4,953 NIS x 12.55%)|
|Above 9,906 NIS||8.5% of 9,906 NIS||842 NIS per month|
Can I contribute more than the legal obligatory pension?
Yes. The amounts stipulated above are minimum contributions. For the 2018 tax year, the upper limit for tax benefits based on pension contributions for an Atzmai is 16.5% of a monthly income of 17,400 NIS (208,800 NIS annually). By contributing more than the minimum obligation, one can benefit from increased tax benefits and a larger future pension.
An Atzmai has the ability to open up a Keren Hishtalmut based on 7% of their income. The tax year in Israel runs from 1st January to 31st December. The upper annual limit for total contributions into the Keren Hishtalmut for 2018 is 18,240 NIS. Contributions equating to the first 4.5% of one’s annual income up to 261,000 NIS is considered a tax deductible expense.
Goldfus Insurance takes no responsibility for changes in Israeli legislation that may alter the accuracy of the above information. For clarification of any changes, please contact us.