Brodet: Career soldiers receive excessive pensions
The Brodet Commission, charged with reviewing the defense budget, shed light for the first time on exorbitant pension plans enjoyed by career soldiers, even though a small minority serve in combat roles. The report refers specifically to the conditions according to which these retired soldiers are paid.
Veteran career soldiers who receive state-supported pensions are paid twice the sum other civil servants receive from their state-supported pensions, including police officers and teachers. Some 28,000 retired members of the security services receive annual pensions worth NIS 3.9 billion, while the state pays NIS 5.7 billion to its other 74,000 retirees.
Thus, the average retired career soldier costs NIS 139,000 per year, while other civil servants cost just NIS 77,000. On top of this cost is the retirement package each career soldier receives, worth NIS 500,000 to NIS 600,000 on average. The value of the military's financial commitments to pensions for existing career soldiers and those who have already retired totals nearly NIS 161 billion.
Career solders enjoy unique pension benefits, starting with the fact that they only need work 24 years on average, which includes their compulsory service. The average retirement age is 45, after which they receive pension payments for 41 years. The average civil servant works 35 years and receives pension payments for 26 years.
Likewise, career soldiers reserve the right to make early pension withdrawals up to NIS 7,000 tax free, a benefit civil servant do not enjoy.
Because of the enormous burden of state-supported pensions, the military began requiring soldiers to pay into their pensions starting in 2004. This seemingly equalized conditions between career soldiers and other civil servants, but such is not the case.
Because career soldiers retire at 45, the military bridges the gap, paying into their pensions until age 67. The military also makes sure to enlarge the amounts soldiers pay into their pensions while serving to make sure they retire with the maximum pension at age 45, which requires larger payments by the military into their pension during the bridging period.
Brodet Commission members remark that the special conditions career soldiers receive because of the transition to the new pension system is unprecedented in the public sector, which also switched from state-supported pensions. These benefits are worth hundreds of thousands of shekels per military retiree, adding up to billions of shekels annually.
Because of this, the commission recommended extending the retirement age from 45 to 57 and reducing pension rights. Likewise, the commission recommends including the cost of paying pensions, which amounts to some NIS 4 billion annually, into the defense budget, so the military will be exposed to the economic discipline of its pensionary decisions and will have motivation to save in this area.