The global financial crisis is the worst since 1929, the Finance Ministry's budgets division wrote in a position paper at the beginning of November. The paper also stated: "While it is still too early to predict the real global implications of the crisis ... it can be said that the impact of the world economic recession will be felt in a global and export-based economy like Israel's."
The Finance Ministry is leaning toward laying out a safety net for savers in pension and provident funds who are aged 60 and above, if they earn less than double the minimum wage. The minimum wage is presently NIS 3,850 a month.
The pension savings in question would be linked to the consumer price index, and returns would be capped at about 3-4 percent a year, say ministry sources.
Most of the top ministry officials feel the proposals raised so far to ease the strain of the financial crisis in Israel are inadequate, at best. Meanwhile, pressure is mounting from all directions to "do something": from the capital market, the political echelon, and from "interested parties."
"The most important thing right now is to get rid of ego," Welfare Minister Isaac Herzog said yesterday in response to the Finance Ministry plan. "I call on the finance minister and the leadership of his ministry not to dig their heels, but to prevent unnecessary conflict and to take the hand of the Histadrut [labor federation] and its leadership and show a sense of responsibility," he said.
Herzog, chair of the ministerial committee on financial settlements, said the government must provide a security net for those saving up for retirement. It also intends to change regulations over channels through which investments can be made toward financial pensions' savings plans.
The Finance Ministry does not mean to provide assistance retroactively from the start of the capital market pullback, but only from the time the proposal is approved by the Knesset, apparently. Nor is the plan to help the over-60s a done deal, say treasury sources. The ministry might elect to institute entirely different plans to solve problems in a pinpoint manner.
Meanwhile, Finance Minister Roni Bar-On has already submitted the draft proposal for vetting by Attorney General Menachem Mazuz.
Intra-ministry discussions continued at a hard pace. On Saturday evening Bar-On held a meeting with top treasury officials that ended at 3 A.M., and yesterday morning he met with Bank of Israel Governor Stanley Fischer to discuss the plan. Throughout yesterday, discussions at all ranks of the ministry also continued.
Labor Chairman Ehud Barak also weighed in yesterday, and referred to the global economic crisis to criticize Bar-On and former finance minister Benjamin Netanyahu. "We all remember the lack of responsibility shown in the transfer of pensions to the stock market," Barak said at a Labor Knesset faction meeting yesterday, referring to reforms made during Netanyahu's tenure.
For all the discussion of bailing out savers close to retirement, the Finance Ministry begs to note that no western governments are instituting plans to bail out pension funds.
At a conference on pension savings yesterday, held jointly by TheMarker and Bank Leumi, Yadin Antebi, the Finance Ministry's commissioner of capital markets, insurance and savings begged the audience to keep a sense of proportion. The public thinks the situation is much worse than it is, Antebi said: Pension fund assets have lost only 10 percent of their value, and pension funds have lost 16 percent. People have the impression that half their pension savings are gone, but it's not true, the watchdog said.
Also, seen over the last 10 years, even after the debacle of 2008, pension and provident funds can boast positive yields, the treasury chieftains point out.
Want to enjoy 'Zen' reading - with no ads and just the article? Subscribe todaySubscribe now