Keren Hishtalmut is the only short term tax free saving plan available in Israel.  One is entitled to withdraw the monies accumulated in the fund after 6 years, free of Capital Gains Tax (before the 6 years are up would be liable to tax penalties). If there is no need to access the money after the 6 year period, the recommendation would be to leave the money in the fund accruing further growth, which would also be free of taxation.

Gemal and Keren Hishtalmut

These saving plans are only an option for the following people:

Sachir – Regular salaried employee

For a Sachir, the ability to open a Keren Hishtalmut is dependent on the benefits received through their place of employment. The salary cap for tax benefits is a monthly salary of NIS __________ . Should one be entitled to a Keren Hishtalmut, the contributions are usually, but not exclusively, as follows: 7.5%  paid by the employer over and above the gross monthly salary (up to the above mentioned salary cap). This is a tax deductible expense for the employer. 2.5%  paid by the employee from within the gross monthly salary (up to the above mentioned salary cap). This is taxable.

Sachir Ba’al Shlita

An employee who has a significant stake or financial interest in the company. As there are many implications of this category, we recommend that you consult with your accountant to clarify your status. A Sachir Ba’al Shlita, has the ability to open a Keren Hishtalmut based on the same principles as a regular Sachir. Due to a Sachir Ba’al Shlita having a significant stake in the company, the tax benefits are reduced. Currently, there is no tax relief for the employee’s contribution. The tax relief on the employer’s contribution is up to 4.5% of the above mentioned salary cap.

 Atzmai – Self-Employed

An Atzmai has the ability to open up a Keren Hishtalmut based on 7% of their income. The tax year in Israel runs from 1st January to 31st December. The upper annual limit for total contributions into the Keren Hishtalmut for 2017 is NIS________. Of the 7%, the first 2.5% is not considered a tax deductible expense. The remaining 4.5% is___________________.
Knowing what your pension will be can be a very complicated process. Pension laws seem to be constantly changing, Companies merge and have different plans. Older plans have different rules from the new plans.  All very confusing, but we can help.
We can give you a concise report of what to expect when you retire including some recommendations to improve your income.