Bank of Israel Report: One in Four Israelis Over the Age of 65 Is Poor

Bank of Israel emphasizes importance of NII allowances in reducing poverty among the elderly.

Over one-fourth of Israelis aged 65 and over were under the poverty line in June 2007. Families headed by a person in this age category are more than twice as likely to be poor than other families.

The Bank of Israel report from which these figures are taken, which will be released on April 1, emphasizes the importance of National Insurance Institute allowances in reducing poverty among the elderly. In 2006 there were about 700,000 people in Israel aged 65 and up, or about 10 percent of the population. At 24.3 percent, the percentage of those classified as poor was high by international standards.

About 90 percent of families headed by an elderly person receives an old-age stipend. These NII allowances represent a significant proportion of these families' income. As a result of the significant state support for the elderly, and particularly for the elderly poor, changes in old-age allowances have a decisive effect on poverty among the elderly.

Without government stipends in general and the old-age allowances in particular, more than half of the country's elderly would be under the poverty line. In 2007, the monthly old-age allowance combined with income support came to NIS 2,181, about 28 percent of the average monthly wage and sufficient to stay above the poverty line for the year. Ostensibly, the incidence of poverty should be lower than the actual incidence; it was higher because some people do not qualify for an old-age stipends and because the qualification criteria for income support are strict.

The Bank of Israel emphasizes in its latest report that in recent years policy makers have increasingly been adopting support for selective rather than universal income support, based on need. This approach, together with budgetary constraints, led to a nominal cut in state allowances in 2002-03 and to a suspension of updates to the allowances.

Last November a decision was made to gradually increase the allowances until January 2010, focusing on need-based support.