National Insurance Reserves Projected to Empty by 2035 Amid Surging Deficits
Israel's National Insurance Institute faces a severe funding crisis, with reserves projected to empty by 2035 amid surging nursing and disability expenditures. The Ministry of Finance and researchers warn that structural demographic gaps and widening deficits require urgent policy reforms.
The National Insurance Institute (Bituach Leumi) is facing one of the most severe financial crises in its history, with its monetary reserves projected to be completely depleted by 2035—nine years earlier than previously forecast. According to a new study by the Israel Democracy Institute authored by researcher Gabriel Gordon, demographic shifts and structural employment trends will generate a cumulative revenue loss of approximately 65 billion shekels by 2049.
Growing Expenditures and Surging Demands
The financial strain is compounded by a sharp escalation in expenditures, driven primarily by soaring costs in nursing care and disability allowances. Nursing care expenses surged from 7 billion shekels in 2018 to 21 billion shekels in 2025, while the proportion of retirement-age citizens receiving nursing care stipends rose from 16% to 30%. Concurrently, the number of eligible children with disabilities expanded from 75,900 in 2020 to 168,300 in 2025, propelling annual expenditures in this category from 2.84 billion shekels to 9.22 billion shekels—a staggering 225% increase.
Demographic Disparities and Revenue Gaps
The study highlights significant disparities in insurance contributions across different population sectors. Non-haredi Jewish citizens pay an average of 2.4 times more to the National Insurance Institute than haredi and Arab citizens, a gap driven largely by wage disparities rather than employment rates alone. A non-haredi Jewish worker contributes an average of 22.6 thousand shekels annually, compared to roughly 15.3 thousand shekels for an employed haredi individual. Researchers estimate that if employment rates and wage levels across haredi and Arab populations matched those of non-haredi Jews, national insurance revenues in 2024 would have increased by 12.5 billion shekels.
Treasury Responses and Future Outlook
Having entered a current-account deficit of 6.4 billion shekels in 2025, the National Insurance Institute faces a scenario where liquid reserves will be exhausted by 2029, necessitating direct state budget interventions. The Ministry of Finance is currently examining a series of corrective measures, including tightening eligibility criteria for specific benefits, adjusting stipends based on functional impairment levels, and increasing contributions for non-working groups, such as raising the nominal 48-shekel monthly payment currently levied on students and kollel participants. While officials stress that depletion of reserves does not equate to an automatic cessation of payments, securing the long-term sustainability of Israel's social safety net remains an urgent challenge for policymakers.
