Party Like a Retired Civil Servant

Israel's Top Public Officials Enjoying Sky-high Pensions

Government spending NIS 68 million annually on 100 biggest pension recipients, not including defense establishment.

Top public officials are enjoying pensions as high as NIS 86,512 a month, well over 12 times the average for a civil servant, according to a document obtained by TheMarker.

Overall, the government is spending NIS 68 million annually on the top 100 biggest pension recipients and NIS 158 million on the top 3,000, according to the document, which doesn't include defense establishment pensioners.

The document shows that the top pension of NIS 86,512 belongs to an unnamed former attorney general.

The pensions are paid out of the budget as opposed to private-sector pensions that are based on the employers' and employee's contributions accumulated in the course of the employee's work life. To earn a monthly pension of NIS 86,000, a worker would need to be earning an average of NIS 2 million annually over 40 years.

The budgetary pension system ended in 2004. All civil servants who were employed before that are entitled to a monthly pension equal to as much as 70% of their final salary. The payments are not based on accumulated savings, as are private sector pensions, but come out of the state budget.

Although civil servants no longer enjoy this perk, the cost of these so-called unfunded pensions is continuing to grow. In 2013, the government budgeted NIS 20.1 billion on pensions, including those for the defense establishment. That figure will keep growing, according to actuarial calculations, until the year 2036, after which it will begin to trend down.

All told, the government expects to lay out some NIS 670 billion on budgetary pensions before all payouts it has to make to current and future retirees are completed sometime around 2070.

Unlike other government programs, budgetary pensions are immune from fiscal cuts. One small effort to rein in the costs by reducing the authority of the army's chief of staff to add to the pensions of careers soldiers was rejected by Finance Minister Yair Lapid. While the Finance Ministry cuts the salaries of civil servants and child allowances to families, raises the value-added and income tax, the pensions budget is untouched.

Furthermore, in contrast to civil servants' salaries, where the treasury's wage commissioner releases annual figures on compensation that exceeds norms, the pensions of top public officials fall under the authority of the treasury accountant general, who releases no data on them of any kind.

In 2002, the government paid out pensions to 68,000 civil servants, not counting former police officers, prisons staff or career army personnel. By 2012, the number had grown to about 98,000, but sources in the government estimate that about another 50,000 army retirees are also receiving budgetary pensions, meaning some 150,000 people are on the roles.

A request by TheMarker for information on army pensions was rejected by the Israel Defense Forces spokesman.

The attorney general's pension is a function of salary plus seniority. The salary of attorneys general is linked to that of judges, which is already quite high, but their pensions are in addition linked to the cost of employing officials of the same level, raising the pension they are entitled to further.

The second highest pension cited in the document obtained by TheMarker is for an unidentified judge in the religious courts (dayan), who is receiving NIS 83,512 a month. The pensions of dayanim as well as those of chief rabbis are also linked to that of judges.

In third place is the widow of a dayan, which illustrates one of the oddities of the system. Survivors of judges and dayanim receive 100% of their spouse's pension while other civil servants' survivors receive only 60%. The widow of the dayan this receives NIS 78,704 a month.

The fourth-highest pension is enjoyed by another attorney general and the fifth by the widow of another dayan. Of the 300 biggest pensions, 83% are held by judges or officials who have salary terms equivalent to judges. Other top salaries belong to a former Knesset guard (NIS 56,848 putting him at No. 16 on the list) and a former cabinet minister (NIS 55,963 at No. 20).

Michal Fattal
Reuters