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Financial Services Supervision Law (Insurance), 5741-1981

חוק הפיקוח על שירותים פיננסיים (ביטוח), תשמ"א-1981

Published: 1981-04-23Consolidated Hebrew text as of 2026-07-26 · Last amended 2026-07-22✓ Amendment status checked against the Knesset legislation record on 2026-09-29
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Unofficial English translation — for reference only. It may contain errors or omissions and cannot be relied on as a legal text. Only the Hebrew text published in Reshumot is legally binding.More

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Despite these checks, it may contain errors, omissions, or imprecise renderings of legal terminology and cross-references, and it may not yet reflect the latest amendments. It cannot be relied upon as a legal text.

The Hebrew text as published in Reshumot (ספר החוקים) and on the Knesset website is the sole authoritative and legally binding version. In any discrepancy, the Hebrew text prevails.

This translation is provided for informational purposes only and does not constitute legal advice. For use in legal proceedings, request a certified Expert Legal Opinion.

Chapter VII-A: Veteran Pension Funds – Appointment of Special Administrator, Rehabilitation Plans and Government Assistance

Section A: Interpretation

Purpose of the Chapter§
78a.

The purpose of this Chapter is to address the actuarial deficit of the veteran pension funds in order to bring them to actuarial balance by means of changes in the rights and obligations of the members and by providing Government assistance that will enable them to pay pensions to their members, all with due regard to the capacity of the State economy and while creating uniformity in the structure of rights.

Interpretation§
78b.
(a)In this Chapter –

"the Public Committee" – the Committee appointed under section 78c;

"the Commissioner" – even where acting by virtue of the Commissioner's authority under the Provident Funds Regulations or the Provident Funds Supervision Law;

"collective agreement" – as defined in the Collective Agreements Law, 5717-1957;

"obligations of the veteran fund" – including obligations that the fund is expected to accumulate in the future;

"the uniform regulations" – the regulations to be determined by the Commissioner under section 78i;

"Government Companies Law" – Government Companies Law, 5735-1975;

"fund balance" – an actuarial balance of a veteran fund, prepared in accordance with directives under this Law and under the Provident Funds Supervision Law and subject to the Commissioner's guidelines;

"management board" – a management board appointed pursuant to the provisions of section 78d(b);

"actuarial balancing mechanism" – rules prescribed in the regulations of a veteran fund pursuant to guidelines and conditions from the Commissioner, which shall periodically adjust the rights of all members of the fund so as to preserve actuarial balance;

"special administrator" – a person appointed under section 78d(a);

"assets of the veteran fund" – including assets that the fund is expected to accumulate in the future;

"actuarial surplus", "actuarial deficit" and "actuarial balance" – a positive or negative difference, or balance, as the case may be, between the total assets of the veteran fund and the total obligations of the veteran fund, as determined in the fund balance; however –

(1)for the purpose of calculating an actuarial deficit in the result of the fund balance for a particular year, under section 78o1(c), the deficit shall be calculated as having a positive value;
(2)for the purpose of calculating an actuarial surplus in the result of the fund balance for a particular year, under section 78o1(c), the surplus shall be calculated as having a negative value;

"pension provident fund" – an insurer that has been granted a licence as referred to in section 15(a1);

"deficit fund" – a veteran fund that is not an enterprise fund, whose actuarial deficit exceeded, on the sixteenth day of Tevet 5762 (31 December 2001), 10% of the total obligations of the fund, and which is listed in Part 1 of the First Schedule;

"veteran fund" – (deleted)

"enterprise fund" – a veteran fund whose regulations restrict membership therein to employees of a particular employer, and which is listed in Part 2 of the First Schedule;

"Provident Funds Regulations" – (deleted)

(b)Any other term in this Chapter shall have the meaning ascribed to it in the Provident Funds Supervision Law, unless otherwise prescribed in this Chapter.

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Section B: Public Committee

Public Committee§
78c.
(a)The Government shall appoint a public committee whose function is to propose to the Commissioner candidates for special administrators and for members of the management boards, and to carry out any other function assigned to it under this Chapter.
(b)The Public Committee shall consist of five members, composed as follows:
(1)a judge to be proposed by the Minister of Justice after consultation with the President of the Supreme Court, who shall serve as chairperson of the Committee;
(2)three members who are persons of commerce and economics or academic staff at institutions of higher education in fields relevant to the implementation of this Chapter;
(3)a workers' representative or a members' representative, to be elected from lists of candidates to be prepared by workers' organisations.
(c)A person is qualified to be appointed as a member of the Public Committee if the conditions referred to in section 24(c) of the Government Companies Law are fulfilled in relation to that person.
(d)The provisions of sections 17 and 17a of the Government Companies Law shall apply, with the necessary modifications, to the appointment of a member of the Public Committee, and furthermore, a person shall not be appointed as a member of the Committee if that person or a relative of that person has a personal, business or political connection to a Minister of the Government or to a relative of such a Minister.
(e)A member of the Public Committee shall be appointed for a term of five years from the date of appointment and may be reappointed.
(f)A majority of the members of the Public Committee shall constitute a quorum at its meetings.
(g)Decisions of the Public Committee shall be adopted by a majority of votes; if the votes are equal, the chairperson of the Committee shall have an additional vote.
(h)The powers of the Public Committee and the validity of its acts shall not be affected by reason of a vacancy in the position of a member or by reason of a defect in the appointment or continuation of service of a member.
(i)Members of the Public Committee are required to act loyally towards the State, faithfully and diligently, as a reasonable person would act in the same position and in the same circumstances, for the purpose of fulfilling the provisions of this Chapter and achieving its objectives.
(j)The Public Committee shall be subject to the audit of the State Comptroller; nothing in this provision shall derogate from other powers of the State Comptroller.

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Section C: Special Administrator and Administration

Appointment of Special Administrator and Administration§
78d.
(a)
(1)The Commissioner shall appoint, upon the proposal of the Public Committee, a special administrator for each veteran fund, except for a veteran fund in which the conditions set out in section 78p have been met, and may appoint one special administrator for several funds or for all of them;
(2)A person is eligible to be appointed as special administrator if the conditions referred to in section 24(c) of the Government Companies Law, 5735-1975 are met in his case, and he has undertaken to devote the majority of his time to his duties as special administrator and not to engage in any other occupation except with the approval of the Commissioner;
(3)The provisions of sections 17 and 17a of the Government Companies Law, 5735-1975 shall apply, mutatis mutandis, to the appointment of a special administrator, and furthermore a person shall not be appointed as special administrator if he or his relative has a personal, business or political connection to any Minister of the Government or to his relative;
(4)The special administrator shall not serve as an office holder in a pension provident fund or in a corporation controlled by a pension provident fund, and shall not be employed as an employee, as a person performing another function or as a consultant of a pension provident fund or of a corporation controlled by a pension provident fund, for a period of one year from the end of his tenure; for this purpose, "control" – as defined in the Securities Law, 5728-1968.
(b)
(1)The Commissioner shall appoint, upon the proposal of the Public Committee, for each veteran fund for which a special administrator has been appointed pursuant to the provisions of subsection (a), an administration of three members, and may appoint one administration for several funds or for all of them;
(2)The following are the members of the administration:
(a)two members who are persons of industry and economics or academic staff members at institutions of higher education in fields relevant to the implementation of this Chapter, to be proposed by the Public Committee, and instead of one person of industry and economics a judge may be appointed in consultation with the Minister of Justice; one of the members appointed pursuant to this sub-paragraph shall be appointed as chairperson;
(b)an employees' representative or a members' representative, to be proposed by the Public Committee from lists of candidates to be prepared by workers' organisations;
(3)A person is eligible to be appointed as a member of the administration if the conditions referred to in section 16a of the Government Companies Law, 5735-1975 are met in his case;
(4)The provisions of sections 17 and 17a of the Government Companies Law, 5735-1975 shall apply, mutatis mutandis, to the appointment of members of the administration, and furthermore a person shall not be appointed if he or his relative has a personal, business or political connection to any Minister of the Government or to his relative;
(5)The administration shall have all the powers vested in a management committee pursuant to section 72(d), as well as the following powers:
(a)to approve an efficiency plan prepared by the special administrator pursuant to the Commissioner's instruction as referred to in section 78l(a), before its submission for the Commissioner's approval;
(b)to approve the recommendations of the special administrator regarding the implementation of additional rehabilitation measures in the fund, beyond those required pursuant to the provisions of this Chapter;
(6)A member of the administration shall not serve as an office holder in a pension provident fund or in a corporation controlled by a pension provident fund, and shall not be employed as an employee, as a person performing another function or as a consultant of a pension provident fund or of a corporation controlled by a pension provident fund, for a period of one year from the end of his tenure; for this purpose, "control" – as defined in the Securities Law, 5728-1968;
(7)A majority of the members of the administration shall constitute a quorum at its meetings;
(8)Decisions of the administration shall be adopted by a majority of votes; if the votes are equal, the chairperson of the administration shall have a casting vote;
(9)The powers of the administration and the validity of its acts shall not be affected by reason of a vacancy in the position of a member or by reason of a defect in his appointment or in the continuation of his tenure;
(10)Members of the administration are obliged to act with loyalty towards all members of the veteran fund, in good faith and with diligence, as a reasonable person in the same position and in the same circumstances would act, for the purpose of fulfilling the provisions of this Chapter and achieving its objectives.
(c)The provisions of section 68 shall not apply to the appointment of a special administrator and an administration pursuant to this section.
Term of Office and End of Tenure§
78e.
(a)A special administrator and a member of the administration shall be appointed for a period of three years; the Commissioner may, upon the recommendation of the Public Committee, extend the term of office from time to time.
(b)A special administrator or a member of the administration shall cease to serve before the end of his term of office in any of the following cases:
(1)he resigned by delivering a letter of resignation to the Commissioner;
(2)he is permanently incapacitated from fulfilling his duties and the Commissioner, with the approval of the Public Committee, removed him from office by written notice;
(3)he was convicted of an offence which, in the Commissioner's opinion, by reason of its gravity, nature or circumstances, renders him unfit to serve in his position;
(4)the Commissioner determined, with the approval of the Public Committee, that he is not fulfilling his duties properly or in a manner that advances the objectives of this Chapter, or that he acted, by act or omission, in a manner that contradicts the Commissioner's instructions and guidelines given pursuant to the provisions of this Chapter;
(5)the Commissioner determined that there is no need for the continued tenure of a special administrator or of an administration of a fund in respect of which the Commissioner has instructed, pursuant to section 78m, that its operation shall be joint with another fund.
Powers of Special Administrator§
78f.

A special administrator shall have all the powers vested in an authorised manager pursuant to Chapter VII, mutatis mutandis, subject to the provisions of this Chapter.

Duties of Special Administrator§
78g.

A special administrator shall manage the affairs of the veteran fund for which he was appointed and shall act to implement the provisions of this Chapter and to realise its objectives, including to carry out all of the following:

(1)locating the assets of the fund, and if they are not under the control of the fund or are not registered in its name in any register maintained pursuant to law – transferring them to its control and registering them in its name;
(2)realising and selling assets of the fund;
(3)ensuring the existence of a complete and accessible database of all the rights of members in the fund;
(4)implementing the uniform rules;
(5)implementing the efficiency plan established pursuant to the provisions of section 78l, or realising the joint operation ordered by the Commissioner pursuant to the provisions of section 78m;
(6)carrying out any other action that the Commissioner instructs.
Commissioner's Guidelines§
78h.

In the exercise of his powers and the performance of his duties, the special administrator shall act in accordance with the Commissioner's guidelines, and the Commissioner may, inter alia, instruct a special administrator to take steps as he directs for the purpose of reducing the actuarial deficit and preventing its formation in the future, or for the purpose of ensuring the welfare of all members across all the veteran funds.

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Section D: Uniform Rules and Efficiency Plans

Determination of Uniform Rules and Their Principles§
78i.
(a)The Commissioner shall prepare uniform rules for all the veteran funds in the arrangement, with the aim of bringing them to actuarial balance and enabling them to pay pensions to their members, having regard to the government assistance to be provided pursuant to the provisions of Section E and to the creation of uniformity in the structure of rights.
(b)The uniform rules shall be prepared in accordance with the following principles and provisions:
(1)there shall be no discrimination between members of a fund;
(2)the rules for calculating members' rights shall be uniform for all the veteran funds in the arrangement, and shall be determined in a clear manner that is not dependent on the exercise of discretion by the fund or by any other party;
(3)the calculation of the pension for a person who begins to receive a pension on the 5th of Tishrei 5764 (1 October 2003) (in this paragraph – the determining date) or thereafter, shall be carried out as set out below, provided that the ceiling on the real increase in the qualifying salary for the pension commencing from October 2003, under any method of calculation, shall be 2 per cent per year:
(a)in respect of members of a veteran fund to which sub-paragraph (b) does not apply – based on the salary ratios average method used in Keren Hagemulot Hamerkazit Shel Ovdei Hahistadrut Ltd., with such modifications as the Commissioner shall determine in the uniform rules;
(b)in respect of members of a veteran fund that the Commissioner has determined was based, on the eve of the determining date, on the last-three-years method, the pension shall be calculated as the sum of the following two components:
(1)in respect of the period up to the determining date – based on the last-three-years average method, as the Commissioner shall determine;
(2)in respect of the period from the determining date onwards – based on the salary ratios average method, as referred to in sub-paragraph (a);
(4)an actuarial balancing mechanism shall be established, including rules regarding actuarial reserves;
(5)the assets of the fund shall be used solely for the payment of pensions to members pursuant to the rules and for covering the operating expenses of the fund, all in accordance with the rules and guidelines to be determined by the Commissioner;
(6)the fund shall deduct management fees at the rates set out below, from payments it makes pursuant to the uniform rules, whether they are pensions or lump-sum payments:
(1)in 2004 – ?%;
(2)in 2005 – 1%;
(3)in 2006 – 1½%;
(4)from 2007 onwards – 1¾%;
(7)the guaranteed salary in the fund, for each month, shall be calculated as the payment actually transferred to the fund divided by the total of the payment rates to be transferred to the fund pursuant to the provisions of section 78k;
(8)if the retirement age is raised pursuant to any law, the age of entitlement to a senior citizen's pension shall be raised accordingly; so long as the retirement age has not been raised to age 67 for men and women, the difference shall be covered by an increase in government assistance beyond the amount specified in paragraph (1) of section 78n(a), as referred to in paragraph (2) of that section; for the purpose of this paragraph, "the difference" – the difference between the fund's liabilities as they would be if the retirement age were raised to age 67 for men and women and the fund's liabilities when the retirement age is age 67 for a man born in May 1942 or thereafter and age 64 for a woman born in May 1953 or thereafter;
(9)the pension for a person who began to receive it before reaching retirement age, as defined in the Retirement Age Law, shall be reduced at a rate to be determined in the uniform rules, based on an actuarial calculation that ensures that the early retirement as aforesaid does not create an actuarial deficit;
(10)the rate of disability according to which a disability pension is paid from the fund shall not be reduced for a person who meets all of the following conditions, even if a decision was taken to reduce the rate of disability in the period between the 5th of Tishrei 5764 (1 October 2003) and the date of publication of this Law:
(a)the decision regarding his entitlement to receive a disability pension from the fund was determined before the determining month as defined in the uniform rules (in this paragraph – the original decision);
(b)a disability pension was paid to him from the fund for the month of September 2003;
(c)the original decision did not specify a fixed period for the receipt of that pension;
(d)one of the following applies:
(1)the date of the original decision was 60 months or more before the date on which the decision to reduce his disability rate was taken, and if no such decision was taken – 60 months or more before he was summoned for a repeat disability examination;
(2)he reached the early retirement age as defined in the uniform rules, before the date on which a decision to reduce his disability rate was taken, and if no such decision was taken – he reached that age before being summoned for a repeat disability examination.
Change of Pension Linkage Mechanism and Adjustment of Liabilities§
78i1.
(a)The Commissioner shall adapt the uniform rules, with respect to the linkage of pensions, to the following provisions:
(1)pensions paid to members shall be updated in January of each year, commencing from 2011 onwards, according to the rate of increase of the new index compared to the previous index; such an update shall apply from the pension of January onwards;
(2)payment for the update of the January pension as referred to in paragraph (1) shall be paid no later than the date of payment of the February pension of the year in which the update was carried out;
(3)a member whose first month of entitlement to a pension fell on or before July 2009 shall be paid pension arrears for the pension months of August 2009 through December 2009, according to the rate of increase of the index of July 2009 compared to the index of July 2008 or compared to the index of the month preceding the first month of entitlement to a pension, whichever is later;
(4)pensions paid to members whose first month of entitlement to a pension fell on or before December 2009 shall be updated at the time of the adaptation of the uniform rules as referred to in this subsection, according to the rate of increase of the index of December 2009 compared to the index of July 2008 or compared to the index of the month preceding the first month of entitlement to a pension, whichever is later; such an update shall apply from the pension of January 2010 onwards;
(5)payments pursuant to the provisions of paragraphs (3) and (4) in respect of pension months up to and including the month following the month in which the uniform rules were adapted as referred to in this subsection shall be paid no later than 60 days from the date of adaptation of the rules as aforesaid.
(b)From each pension payment made by the fund, including payments pursuant to this section, an amount shall be deducted at a rate and in a manner to be directed by the Commissioner, based on an actuarial calculation that ensures that no difference arises between the fund's liabilities as they are after the adaptation of the uniform rules as referred to in subsection (a) and the fund's liabilities as they were on the eve of the adaptation of the rules, all as at the date of the said actuarial calculation; the Commissioner shall so direct no later than 60 days from the date of adaptation of the uniform rules as referred to in subsection (a).
(c)For the purpose of this section –

"the index" – (deleted);

"the new index" – the index for the month of December of the year preceding the month of the update;

"the previous index" –

(1)for the purpose of the first update of a pension for a member whose first month of entitlement to a pension fell in January 2010 or thereafter – the index of the month preceding the first month of entitlement to a pension;
(2)for the purpose of an update other than an update referred to in paragraph (1) – the last index according to which the pension was updated;

"the first month of entitlement to a pension" – the first month in respect of which a pension is paid from the fund.

Application of Uniform Rules and Their Amendment§
78j.
(a)From the date to be determined by the Commissioner, the uniform rules shall replace the rules that applied in each of the veteran funds in the arrangement.
(b)The provisions of the uniform rules shall apply notwithstanding anything provided in any agreement or other arrangement.
(b1)An employee who is a member of a veteran fund in the arrangement and who, pursuant to the provisions of a collective agreement applicable to him, is entitled to request the cessation of the transfer of active-employee payments from his salary and the cessation of the transfer of his employer's payments in respect of that salary, and who has requested the cessation of the transfer of such payments, shall be subject to all the provisions of the uniform rules with respect to an inactive member.
(c)If the Commissioner considers that it is required in order to achieve the objectives of this Chapter and the principles enumerated in section 78i, he may, with the approval of the Minister of Finance and with the approval of the Labour, Welfare and Health Committee of the Knesset, amend the uniform rules, and the amendment shall enter into force 30 days after the day on which notice thereof was given to the funds to which it applies.
Rates of Payment to the Fund§
78k.

To the rates of payment from the salary of the employee in respect of which employer and active-employee payments are transferred to a veteran fund in the arrangement, pursuant to any agreement, arrangement or collective agreement, as they were on the 28th of Nisan 5763 (30 April 2003) (in this section – the determining date), the following rates shall be added:

(1)to the active-employee payments – there shall be added each year, in each of the years 2004 to 2006, a rate of ? percentage points, and in 2007, ½ a percentage point, so that from 2007 onwards the contribution rate shall be higher by 1½ percentage points than the contribution rate at the determining date;
(2)to the employer contributions – there shall be added each year, in each of the years 2004 to 2006, a rate of ? percentage points, and in 2007, ½ a percentage point, so that from 2007 onwards the contribution rate shall be higher by 1½ percentage points than the contribution rate at the determining date.
Efficiency Plan§
78l.
(a)The Commissioner may instruct the special administrator to prepare a plan for improving the operational efficiency of the fund under his management, which shall be submitted, with the approval of the administration, for the approval of the Commissioner, and the Commissioner may prepare a uniform plan for improving the operational efficiency of veteran funds in the arrangement, including by way of merging their operations.
(b)The special administrator shall act to implement the efficiency plan as referred to in subsection (a), within the period to be determined by the Commissioner.
Joint Operation of Funds§
78m.

The Commissioner may instruct that the operation of veteran funds in the arrangement shall be joint, and the Minister of Finance may give instructions in this regard.

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