Child Benefits in Israel to Rise in 2016, Retroactive to May

Increase comes day after panel approves government savings program for children.

Amos Ben Gershom / GPO

Child allowances will increase next year, retroactive to May 2015, following a Knesset Finance Committee decision Monday.

The monthly benefit for the first child and for the fifth and each additional child in a family will rise to 150 shekels ($38), from 140 shekels. The stipend for the second through the fourth child will rise to 188 shekels, also from 140 shekels.

In January, parents will receive a one-time adjustment of 230 shekels for their first child and for a fifth child and up; and of 572 shekels for the second through fourth child.

This comes a day after the committee approved a government savings program for all children, the funds in which will be available for withdrawal when the child turns 18, free of capital gains tax. The state will deposit 50 shekels each month into an account for each child. Parents will also be able to deposit up to 50 shekels a month.

This program will also be retroactive to May 2015, and will take effect in the beginning of 2017.

Raising child benefits was a demand of Prime Minister Benjamin Netanyahu’s ultra-Orthodox coalition partners, who wanted stipends increased to their 2012 levels. The Finance Ministry’s budget division drew up the savings plan in an effort to divert some of the stipend money toward savings, instead of making it available to parents to use for monthly expenses.

Monthly 50-shekel deposits over the course of 18 years would total 10,800 shekels. Including interest, the fund is likely to be worth some 18,000 shekels by the time the child is eligible to withdraw the money.

The savings plan is expected to cost the state 1.62 billion shekels a year. Such plans are already in effect in other countries.