800 billion shekels: The deficit in the National Insurance Institute
The actuarial deficit of the National Insurance Institute is estimated at nearly double the cost of the war, and the reserve fund intended to cover it is expected to be depleted as early as 2035 — ten years earlier than originally planned. The aging population is inflating benefit payments, but the question is whether this is the only reason or if there is also a policy failure here. Gad Lior, ynet's economic commentator, explains how we reached this deficit and what is expected to happen when the fund is depleted.
The expected deficit in the National Insurance Institute stands at 800 billion shekels. This is twice the cost of the war — a huge sum that will be difficult to overcome. It is a cash flow deficit where annual expenses exceed revenues. We will start to feel this deficit within a few years. This stems from the fact that people are living longer, which is a factor in the total amount of benefits growing. There is a reserve fund invested in special bonds of the Ministry of Finance, which is intended to cover this deficit in years when receipts are insufficient, explains Gad Lior, ynet's economic commentator.
«Many in the public do not understand what the National Insurance Institute means. Its principle is mutual guarantee. The working public pays a monthly premium while it is productive and healthy. The goal is to ensure financial support in cases where earning capacity is impaired — old age, disability, unemployment, etc. This mechanism is intended to prevent a rapid transition from poverty resulting from loss of income to extreme poverty in order to maintain social stability. Millions of Israelis receive benefits for all sorts of reasons. Without the National Insurance Institute, there would be another million or two additional poor people here.»
«A collapse of the National Insurance Institute will not happen. A state that would allow such a thing is not a state. The meaning of the depletion of the fund is that around the year 2035 there will be no reserves to fill the current gap. This will not cause the cessation of benefit payments, but there will remain money to pay only part of the benefits. In such a situation, an old-age pension, which is already very low, will decrease even further. The state will be required to make decisions that will ensure the continued provision of benefits.»
