Will the National Insurance Institute cut benefits dramatically? "Not just a scenario"

The advertisement of the National Insurance Institute promises to be "by your side in the important moments of life," but behind the scenes, a worrying picture emerges regarding the financial situation of the institution. According to data and forecasts presented recently, the gap between the National Insurance Institute's expenditures on benefits and its income from insurance premium collections is widening, and in 2029, a situation may arise where existing sources will not be enough to cover all obligations.

Journalist Matan Hodorov addressed the issue in a video he published on his Telegram channel "Economic Updates." According to him, "Under the radar, the committee was recently shown how severe the catastrophe is in the coffers of the most important social institution in Israel."

Hodorov noted that there is already a negative gap of 6.4 billion shekels between expenditures on payments to citizens and income from insurance premium collections from employees and the self-employed. According to him, the gap is currently financed through past surpluses that have been accumulated, but official forecasts indicate that in 2029, existing sources may no longer be enough. "This is not just a scenario, but an official forecast ahead of a collapse," said Hodorov.

The financial crisis at the National Insurance Institute is not new. In recent years, expenditures on a number of benefit branches have grown rapidly, partly due to an increase in the number of those eligible for nursing, disability, and disabled child benefits.

Thus, according to recently published data, the number of nursing benefit recipients rose from 180.4 thousand in 2018 to 384.5 thousand in 2025, while the volume of payments grew from 7 billion shekels to 21.1 billion shekels.

Other benefits have also seen significant growth. The number of disabled child benefit recipients rose from 75.9 thousand in 2020 to 168.3 thousand in 2025, and the expenditure on benefits grew during that period from 2.84 billion shekels to 9.22 billion shekels.

Alongside the rise in expenditures, there is a dispute regarding the factors that led to the erosion of the National Insurance Institute's reserves. While the Ministry of Finance points to the expansion of eligibility and the growth in benefit expenditures, other parties also point to the policy of governments over the years, including changes in the institution's funding sources.

In his video, Hodorov also pointed to the gaps in the level of insurance premiums paid by different groups in the population: according to him, an employee earning the average wage in the economy pays about 5,880 shekels a year in national insurance premiums. An unemployed person with no income pays 1,716 shekels a year, while a student or an eligible yeshiva student (avrech) pays only 576 shekels a year.

In the Ministry of Finance, proposals have already been raised to re-examine the collection policy, among other things by increasing the payment base and adjusting the level of insurance premiums for those who do not work. In documents published in the past, it was noted that a broad increase in insurance premiums on the working public might burden the tax load and affect the labor market.

Therefore, one of the directions being examined is a change in the level of payments for populations that do not work and currently pay minimal or reduced insurance premiums. However, even such a change alone is not expected to solve the deficit problem.

So what will happen to the benefits? According to Hodorov, decision-makers have several options for dealing with the widening gap: increasing collection, changing the discount policy, or making changes to expenditures and benefits.

"It is possible to cut benefits dramatically, but then the weak and the sick will be harmed," he said. On the other hand, an additional increase in insurance premiums from employees and the self-employed will increase the burden on the public that already bears a central part of the collection. "Or it is possible to cut the generous discount policy for those who do not serve and work," added Hodorov.

As of now, no decision has been made to cut benefits. The forecasts for 2029 also do not describe a situation where all benefits will stop in one day, but a situation where the sources available to the National Insurance Institute may not be enough to cover all obligations. In such a case, the state will be required to decide whether to inject additional sources, increase collection, change eligibility, or combine several measures.

Hodorov concluded with a warning: "One thing is certain: if we do nothing, in the end, none of us will enjoy social security. This writing has long been on the wall."

It should be noted that the National Insurance Institute was careful to publish after the exposure of the deficit: "We call on the public not to panic and to know that the National Insurance Institute will continue to represent it for the benefit of continuing to receive assistance when needed - and so it will be."