The combined actuarial deficits of Israel’s universities – the amount of the pension obligations to employees versus the amount of income they have funded for it – has ballooned to about 30 billion shekels ($8 billion), according to the latest estimates by the institutions themselves obtained by TheMarker.
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That would add up to 5 billion shekels more than when TheMarker prepared its own estimate in 2012, and is double the level estimated by the state comptroller in a 2008 report, which was the first to call attention to the problem. The deficit has grown as life expectancy and the number of years a university pensioner can expect to receive payments have risen, as well as the low rate of interest prevailing since 2008.
The Hebrew University of Jerusalem is in the worst shape by far, with a deficit of 13 billion shekels. As a result, the university will be forced to allocate hundreds of millions of shekels every year through 2080 to cover the gap with money from its own budget and from the government’s. In 2014 alone, The Hebrew University set aside 655 million shekels for pension payments, half of that coming from the state budget.
Despite the huge financial threat hovering over the universities from the deficit, no negotiations to resolve the problem have been initiated, except in the case of The Hebrew University. But without a solution, the deficit will inevitably grow. Talks that were supposed to get underway in 2010 over a comprehensive solution failed to get off the ground, and since then the Council of Higher Education has preferred to address the problem on a case-by-case basis.
The Finance Ministry, however, said it was confident the situation was under control. “According to the data the ministry has, all the universities, with the exception of The Hebrew University, are in fiscal balance, which means their required actuarial payments are an integral part of the institution’s current budget,” it said, adding that the government allocates about 600 million shekels a year to help cover the costs.
At 8.1 billion shekels, the Technion Israel Institute of Technology has the second-largest actuarial deficit. Though it is much smaller than The Hebrew University’s, it is big enough to pose a threat to the institution. Tel Aviv University’s actuarial deficit is the third largest at 6.8 billion shekels, and the University of Haifa next at 2.1 billon.