High-Risk Provident Funds Outperform Bank Deposits in Child Savings Program
A recent PwC study shows that Israel's Savings for Every Child program yields significantly higher returns in high-risk provident funds compared to traditional bank deposits.
The "Savings for Every Child" program, launched in 2017 by the National Insurance Institute, is designed to help every child in Israel accumulate funds by age 18. The National Insurance deposits 58 NIS monthly for each child, and parents can choose to double the contribution by matching it from their child allowance. These funds can be managed through provident funds or bank deposits.
A report published by the National Insurance in August revealed that from the program's inception through the end of 2025, approximately 25.4 billion NIS was deposited. Some 17.7 billion NIS—70% of the total—came from the National Insurance, while about 7.7 billion NIS was added by parents. Accumulated profits during this period reached roughly 3.85 billion NIS.
Choosing the Right Investment Track
However, not all parents choose to increase the savings. Out of 3,455,443 active savings plans in 2025, parents added the matching 58 NIS in 2,182,409 plans, or 63.2%. Furthermore, the cumulative parental selection rate for the enhanced savings track stands at around 60% since the program began.
A new study conducted by PwC for the Association of Investment Houses, published in Calcalist, highlights the profound impact of choosing the appropriate investment track. According to the study, for accumulated deposits totaling about 11,500 NIS under the enhanced savings framework, a provident fund with a high-risk track yielded a profit of about 8,800 NIS, compared to roughly 2,000 NIS in the highest-performing bank deposit track. The weakest bank track yielded only about 500 NIS.
"In a PwC simulation based on the past 9 years of returns, a provident fund in a high-risk track could reach a total sum of about 81,600 NIS by age 18, with profits alone nearing 56,000 NIS."
Long-Term Projections and Regulatory Changes
By comparison, bank deposits in the simulation ranged between 29,000 NIS and 35,000 NIS. When savings are extended until age 21, the simulation shows a sum of about 114,000 NIS in the high-risk track, compared to 30,000 to 40,000 NIS in banks.
It is important to note that this is a simulation based on assumptions of continued returns, and past performance does not guarantee future results. Additionally, outcomes are affected by risk levels and taxation upon withdrawal. Meanwhile, a legislative amendment that took effect at the beginning of 2025 allows future deposits to be transferred from banks to provident funds, with approximately 98,000 savings plans transferred during 2025. Data shows that the share of active savings managed in banks dropped to about 16%, representing roughly 583,000 savings plans.
