Israeli Treasury, Army Close to Terms on Military Pensions

Agreement will reduce number getting 'bridge pensions,' create mechanism for enforcing army spending discipline.

The silhouettes of two Israel Defense Forces soldiers during a nighttime exercise on the coast of Ashdod, November 2015.
Ilan Assayag

The treasury and Israel Defense Forces are in the final stages of hammering out an agreement that will preserve the big pensions and payouts career soldiers currently enjoy, but put ceilings on how many will get them and give the treasury reliable data on costs for the first time ever.

The agreement, which caps months of acrimony between the two ministries over the issue, has the critical support of Chief of Staff Lt. Gen. Gadi Eisenkot. Pensions and pay have been eating up an increasing amount of the defense budget, which has been growing.

The two sides agreed Sunday that the 2016 defense budget would be about 60.5 billion shekels ($15.6 billion), a compromise between what the treasury and defense ministries each wanted.

Still, treasury officials are concerned about the IDF violating the agreement’s terms. “If that were to happen, we would turn to the attorney general to examine whether we can impose sanctions,” said one official Monday.

Under the emerging agreement, the number of career officers eligible for early retirement at age 45 and a so-called “bridge pension” to cover them until they reach the official retirement age of 67 would be reduced. Instead of about 1,100 annually, the number will be reduced to 750, producing big savings.

Of the 1,100, close to 400 career soldiers would be cashiered at age 35 and entitled to a one-time payout of up to 300,000 shekels – but not a bridge pension. Some 30-40% of them will be moved into civilian army jobs and remain on the payroll to age 67.

Even among the remaining 750, some 350 will remain at their jobs to age 55, at which point they will get a bridge pension – but a much smaller one than if they had left at 45. Ultimately, only about 370 career officers will enjoy the old bridge pension terms, sources said.

Career soldiers will still be entitled to a pension funded by the government that is in no way affected by the agreement, the sources said.

The success of the agreement in controlling costs hinges on the treasury’s ability to police the defense budget, something it has traditionally been unable to do. The defense establishment has also had trouble containing costs, which the government’s Locker Committee on defense spending reform noted when it pointed to the growth in the number of career soldiers, despite a promise to reduce it.

The emerging agreement creates several mechanisms to ensure compliance, among them the army agreeing to complete fiscal transparency over its salaries and pensions.

Moreover, the accord calls for a law that fixes the number of career soldiers getting bridge pensions, and mandates declining ceilings for all salary and pension costs over the years. It bans moving money from other parts of the budget to salaries and pensions, as Finance Ministry officials suspect the army has done in the past.

In addition, the agreement quotas the number of senior officers the army has from the level of colonel and above.

The agreement comes after the Locker Committee proposed deep reforms last summer, arousing huge protests from the army and Defense Minister Moshe Ya’alon. The emerging deal hews closer to the army’s counterproposal in the form of its Gideon Plan.

The Locker panel had proposed doing away with bridge pensions altogether and raising the pension age from 45. Only 15% of career officers – all of them in combat units – would continue to get a bridge pension, since their jobs don’t allow them to continue serving until an advanced age.

Treasury officials said Monday the agreement’s unprecedented terms calling for a ceiling on career personnel and those eligible for pensions would give them the tools to monitor and enforce it, although they conceded that the sanctions provisions remained unclear.

Sources said the army also has an interest in seeing the agreement work, since that will ensure the Locker recommendations remain dead and buried.