Disagreement Between Histadrut, Employers Blocks Pension Plan

Conditions are significantly worse than current plans covering other workers.

The new pension agreement meant to cover over a million workers in the private sector has been blocked once again.

A disagreement between the Histadrut Labor Federation and the three organizations from the private sector representing the employers has delayed the signing of the deal to cover all privately employed salaried workers in Israel.

The general pension agreement was considered a major breakthrough for Israeli pension rights, and was scheduled to take effect in January 2008.

If the deal goes through, over a million employees of mostly small companies and workshops will join the over a million and a quarter workers in the public sector and the employees of large retailing chains in enjoying pension benefits.

The plan is for workers and employers to pay 2.5 percent of salaries into the pension funds in the first year of coverage, rising to 15 percent over five years.

These conditions are significantly worse than current plans covering other workers, which in general require payments of 17.5 to 20.5 percent of employees' salaries.

The Chambers of Commerce, representatives of self-employed workers and the light industrial sector have all been negotiating the deal with the Histadrut.

Among the points still in contention are who decides where the pension money will be invested when an employee cannot decide on which pension fund to join. The Histadrut wants to have the right to decide in such a case, while the employers insist that they should be the ones to choose.

Another problem applies to workers who now have jobs with pension deductions in the 17.5 to 20.5 percent range. If such a worker changes jobs to an employer with the new, worse pension conditions, what happens to his benefits? The Histadrut wants the new employer to continue paying at the higher rate, while the employers object.