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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Section F: Miscellaneous Provisions
Application§
78p.
(a)The provisions of this Chapter, except for the provisions of section 78n(d), shall not apply to a veteran fund that is not a deficit fund, if it is one of the following:
(1)a fund in which, on the 16th of Tevet 5762 (31 December 2001), there was no actuarial deficit, and which satisfies both of the following:
(a)before the 3rd of Av 5763 (1 August 2003), it submitted to the Commissioner an application to prescribe an actuarial balancing mechanism in its articles of association;
(b)before the 7th of Tevet 5764 (1 January 2004), an actuarial balancing mechanism, as approved by the Commissioner, was prescribed in the fund's articles of association;
(2)a fund in which, on the 16th of Tevet 5762 (31 December 2001), there was an actuarial deficit of less than 10% of the fund's total liabilities, or an occupational fund, which satisfies, in addition to the conditions referred to in sub-paragraphs (a) and (b) of paragraph (1), both of the following:
(a)by the date referred to in paragraph (1)(a) – it submitted to the Commissioner a plan that would bring it to actuarial balance;
(b)by the date referred to in paragraph (1)(b) – the plan, as approved by the Commissioner, acquired binding force (in this section – the binding plan).
(b)Where the provisions of this Chapter were not applied to a fund as referred to in subsection (a), and the fund did not activate the actuarial balancing mechanism prescribed in its articles of association at the time required for its activation, or did not act in accordance with the binding plan, as the case may be, the Commissioner may determine that the provisions of this Chapter, in whole or in part, shall apply to it.
(c)The provisions of section 78n(d) shall not apply with respect to a member of a veteran fund who began to receive a pension before the 5th of Tishri 5764 (1 October 2003).
Preservation of powers§
78q.
Nothing in the provisions of this Chapter shall derogate from any power vested in the Commissioner under the provisions of this Law and under any other law, and the Commissioner may exercise such a power, inter alia, for the purpose of achieving the objects of this Chapter and implementing it.
Precedence§
78r.
The provisions of this Chapter shall apply notwithstanding anything provided in any law or agreement, including a collective agreement.
Regulations for the implementation of Chapter VII-A§
78s.
The Minister of Finance, with the approval of the Finance Committee of the Knesset, may make Regulations for the implementation of this Chapter.
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Contact Us →Chapter VII-B: Safety Net for Veteran Pension Funds Not in Arrangement
Purpose§
78t.
The purpose of this Chapter is to grant Government assistance to veteran pension funds that are not in arrangement by means of establishing a safety net, in order to mitigate the effect of changes in the interest rate curve on the rights of the members of those funds, subject to changes being made to the rights and obligations of the members therein.
Definitions§
78u.
In this Chapter –
"yield curve interest rate effect", "4% interest rate effect", "interest rate curve", "previous interest rate curve", "risk-free interest rate", "expected index change rate", "previous year", "fund balance result", "fund balance result according to the interest rate curve", "fund balance result according to an interest rate of 4%" and "Amendment No. 33" – as defined in section 78o1(i);
"fund balance" – as defined in section 78b;
"tradeable assets" – the total assets of a veteran pension fund not in arrangement, excluding:
(1)a non-tradeable bond issued by the State of Israel to a veteran pension fund not in arrangement, under the State Loan Law, 5739-1979;
(2)amounts paid by the Government to the fund from the state budget;
(3)other assets that are not transferable to another person under law or agreement;
"the cumulative amount", in a given year – the amount from within the safety net of a veteran pension fund not in arrangement, derived from the aggregation of the amounts referred to in paragraphs (1) to (4) of section 78v(d), as calculated in that year; however, in respect of the years preceding the year 2012 the cumulative amount shall be – 0;
"actuarial surplus", "actuarial deficit" and "actuarial balance" – a positive or negative difference, or a balance, as the case may be, between the total assets of the veteran pension fund not in arrangement and the total liabilities of the fund, as determined in the fund balance; however –
(1)for the purpose of calculating an actuarial deficit in the fund balance result in respect of a given year, under section 78v(d), such deficit shall be calculated as having a positive value;
(2)for the purpose of calculating an actuarial surplus in the fund balance result in respect of a given year, under section 78v(d), such surplus shall be calculated as having a negative value;
"cushion rate" – the ratio between the amount referred to in paragraph (1) below and the amount referred to in paragraph (2) below:
(1)the amount determined for the fund in Schedule First B;
(2)the difference between the value of the fund's liabilities according to the fund balance for the year 2011 as calculated in accordance with the interest rate curve, and the value of the fund's liabilities according to that same balance, when calculated according to an interest rate of 4%;
"rate of effect of changes in the articles" – the ratio between the amount referred to in paragraph (1) below and the amount referred to in paragraph (2) below:
(1)the difference between the value of the fund's liabilities according to the fund balance for the year 2011 and the value of the fund's liabilities according to that same balance had the fund's articles been amended in accordance with section 78v(a)(1) to (4) at that time;
(2)the value of the fund's liabilities according to the fund balance for the year 2011;
"notional interest rate for the year 2011" – a notional interest rate according to which the result of calculating the value of the fund's liabilities in the fund balance for the year 2011 is identical to the result of calculating the value of the fund's liabilities as it appeared in the fund balance for the year 2011;
"the determining year" – the year in which the fund's liabilities were reduced by the rate of effect of changes in the articles as referred to in section 78v(a);
"calculation year" – a given year, commencing in the year 2012;
"updated cushion ceiling" – the lower of the following:
(1)the cushion rate multiplied by the difference between the value of the fund's liabilities according to the fund balance in respect of the year preceding the determining year as calculated according to the notional interest rate for the year 2011, and the value of the fund's liabilities according to the fund balance in respect of the year preceding the determining year as calculated according to an interest rate of 4%;
(2)the amount determined for the fund under Schedule First B, plus the index change rate according to which the fund balance in respect of the year preceding the determining year was calculated as against the index of December 2011.
Safety net for a veteran pension fund not in arrangement§
78v.
(a)Funds shall be transferred to a veteran pension fund not in arrangement from the state budget, subject to the conditions set out in this section (in this Chapter – safety net for a veteran pension fund not in arrangement), provided that the fund's articles have been amended in accordance with the particulars set out below, for the purpose of reducing the fund's liabilities, after approval has been obtained from the Commissioner, in advance and in writing, for such amendment:
(1)the age of entitlement to receive an old-age pension from the fund shall not be less than the age referred to in Schedule First A, according to the insured member's gender and month of birth (in this section – the age of entitlement to receive an old-age pension);
(2)if the retirement age within the meaning of the Retirement Age Law is raised above the age of entitlement to receive an old-age pension, the age of entitlement to receive an old-age pension from the fund shall be raised accordingly;
(3)the old-age pension to be paid by the fund to a person who requested to receive it before reaching the age of entitlement to receive an old-age pension shall be reduced at a rate to be determined in the fund's articles according to an actuarial calculation that will ensure that early retirement as aforesaid does not increase the fund's liabilities;
(4)from every payment made by the fund under its articles, whether it is a pension or a one-time payment, the fund shall deduct, at a minimum, the following rates:
(a)in the determining year – ¾%;
(b)in the first year following the determining year – 1%;
(c)in the second year following the determining year – 1½%;
(d)from the third year following the determining year onwards – 1¾%.
(b)The Commissioner may approve a veteran pension fund not in arrangement to amend its articles so as to provide therein that after the age of entitlement to receive an old-age pension from the fund has been raised in accordance with subsection (a)(1) or (2), as the case may be, the old-age pension from the fund paid to a person in respect of whom the age of entitlement has been raised as aforesaid shall be increased by a certain rate, provided that the cost arising from such increase shall be funded by means of a reduction of other liabilities of the fund and that the total reduction of the fund's liabilities following the amendments to the articles referred to in subsection (a) and in this subsection shall be at least equal to the liability differential due to the raising of the age of entitlement; for this purpose, "liability differential due to the raising of the age of entitlement" – the difference between the fund's liabilities in the determining year had the age of entitlement to receive a pension not been raised as referred to in subsection (a)(1) or (2), as the case may be, and the fund's liabilities in the determining year following the raising of the age of entitlement as aforesaid.
(c)Notwithstanding the provisions of subsection (a), a veteran pension fund not in arrangement that amended its articles as referred to in that subsection after the 18th day of Tevet 5773 (31 December 2012) shall be entitled, commencing in the year preceding the determining year, to an amount from the safety net for the fund calculated in accordance with the provisions of subsection (d), provided that it amended its articles as aforesaid by the end of the determining year such that the total of its liabilities, as at the end of the year preceding the determining year, was reduced by the rate of effect of changes in the articles, and provided that the Commissioner's approval was obtained in advance and in writing for such amendment to the articles.
(d)The amount from the safety net of a veteran pension fund not in arrangement shall be calculated, in every calculation year, as the aggregation of the amounts derived under paragraphs (1) to (5) below, less the amount referred to in paragraph (6) below, provided that the amount obtained after such deduction is a positive amount, and it shall not exceed the amount referred to in paragraph (7):
(1)the amount derived from the aggregation of all of the following:
(a)the cumulative amount in the previous year;
(b)the amount derived from the product of the expected index change rate in respect of the calculation year, multiplied by the cumulative amount in the previous year;
(c)the amount derived from the product of the risk-free interest rate in respect of the calculation year, multiplied by the amount derived from the aggregation of the amounts referred to in sub-paragraphs (a) and (b) of this paragraph;
(2)the amount derived from the product of the amount referred to in sub-paragraph (a) below, multiplied by the rate referred to in sub-paragraph (b) below:
(a)the amount derived from the aggregation of the fund balance result according to an interest rate of 4% in respect of the previous year, and the product of the expected index change rate in respect of the calculation year multiplied by such balance result;
(b)the positive or negative difference, as the case may be, between the interest rate of 4% and the risk-free interest rate in respect of the calculation year;
(3)the positive or negative difference, as the case may be, between the amount referred to in sub-paragraph (a) below and the amount referred to in sub-paragraph (b) below:
(a)the amount derived from the aggregation of the amounts referred to in sub-paragraphs (1) and (2) below, less the amount referred to in sub-paragraph (3) below:
(1)an amount equal to the product of 4% multiplied by the amount derived from the aggregation of the value of tradeable assets in the fund balance in respect of the previous year and the product of the expected index change rate in respect of the calculation year multiplied by such asset value;
(2)an amount equal to the sum of the products of each index-adjusted receipt multiplied by the proportional part of the interest rate of 4% from the time of receipt until the end of the calculation year; for this purpose, "index-adjusted receipt" – a payment received by the fund in the calculation year, plus the product of the proportional part of the expected index change rate in respect of the calculation year from the time of receipt until the end of the calculation year, multiplied by that receipt;
(3)an amount equal to the sum of the products of each index-adjusted payment multiplied by the proportional part of the interest rate of 4% from the time of payment until the end of the calculation year; for this purpose, "index-adjusted payment" – a payment made by the fund in the calculation year, plus the product of the proportional part of the expected index change rate in respect of the calculation year from the time of payment until the end of the calculation year, multiplied by that payment;
(b)the amount derived from the aggregation of the amounts referred to in sub-paragraphs (1) and (2) below, less the amount referred to in sub-paragraph (3) below:
(1)an amount equal to the product of the risk-free interest rate in respect of the calculation year, multiplied by the amount derived from the aggregation of the value of tradeable assets in the fund balance for the previous year and the product of the expected index change rate in respect of the calculation year multiplied by such asset value;
(2)an amount equal to the sum of the products of each index-adjusted receipt as defined in paragraph (3)(a)(2), multiplied by the proportional part of the risk-free interest rate in respect of the calculation year from the time of receipt until the end of the calculation year;
(3)an amount equal to the sum of the products of each index-adjusted payment as defined in paragraph (3)(a)(3), multiplied by the proportional part of the risk-free interest rate in respect of the calculation year from the time of payment until the end of the calculation year;
(4)the positive or negative difference, as the case may be, between the yield curve interest rate effect in respect of the calculation year and the 4% interest rate effect in respect of the calculation year, less the amount referred to in paragraph (3);
(5)the positive or negative difference, as the case may be, between the amount referred to in sub-paragraph (a) below and the amount referred to in sub-paragraph (b) below:
(a)the fund balance result in respect of the calculation year, according to the interest rate curve;
(b)the fund balance result in respect of the calculation year, according to an interest rate of 4%;
(6)an amount equal to the aggregation of the amounts from the safety net for the veteran pension fund not in arrangement that were transferred to that fund under this section, during the period from the date of commencement of Amendment No. 33 until the end of the calculation year, plus the expected index change rate and plus the risk-free interest rate, all in respect of each year from the date of payment of each such amount until the end of the calculation year;
(7)the lower of the following:
(a)the maximum amount referred to in subsection (e) or (f), as the case may be;
(b)the actuarial deficit in the fund balance, and if there is no actuarial deficit – 0; for the purpose of calculating the deficit as aforesaid, amounts due to the fund under this section shall not be regarded as assets of the fund.
(e)
(1)the maximum amount of the safety net for a veteran pension fund not in arrangement that amended its articles by the 18th day of Tevet 5773 (31 December 2012) shall be, in every calculation year commencing from the determining year, the amount referred to in sub-paragraph (a) below, less the amount referred to in sub-paragraph (b) below:
(a)the amount determined for the fund in Schedule First B, plus the index change rate according to which the fund balance in respect of the calculation year was calculated as against the index of December 2011, and plus interest at the rate of 3.48% per annum in respect of the period from January 2012 until the end of the calculation year;
(b)the total amounts transferred to the fund from its safety net under this section, during the period from the date of commencement of Amendment No. 33 until the end of the calculation year, plus the index change rate according to which the fund balance in respect of the calculation year was calculated as against the index of the month in which each such amount was paid, and plus interest at the rate of 3.48% per annum in respect of the period from the date of payment until the end of the calculation year;
(2)the maximum amount of the safety net for a veteran pension fund not in arrangement that amended its articles after the 18th day of Tevet 5773 (31 December 2012) shall be, in every calculation year commencing in the year preceding the determining year as referred to in subsection (c), the amount referred to in sub-paragraph (a) below, less the amount referred to in sub-paragraph (b) below:
(a)the updated cushion ceiling plus the index change rate according to which the fund balance in respect of the calculation year was calculated as against the index according to which the fund balance in respect of the year preceding the determining year was calculated, and plus interest at the rate of 3.48% per annum in respect of the period from January of the determining year until the end of the calculation year;
(b)the total amounts transferred to the fund from its safety net under this section, during the period from the year preceding the determining year until the end of the calculation year, plus the index change rate according to which the fund balance in respect of the calculation year was calculated as against the index of the month in which each such amount was paid, and plus interest at the rate of 3.48% per annum in respect of the period from the date of payment until the end of the calculation year.
(f)Notwithstanding the provisions of subsection (e) –
(1)if governmental assistance was given to a veteran pension fund not in arrangement in addition to the assistance fixed in this Chapter, and in addition to the assistance given to the fund on the eve of the commencement of Amendment No. 33, the additional governmental assistance as aforesaid shall be deducted from the maximum amount referred to in subsection (e), provided that the rights of members in that fund as they were on the eve of the provision of the additional governmental assistance shall not be prejudiced as a result of such deduction;
(2)if in a calculation year the ratio between the amount referred to in subsection (e)(1)(a) or (2)(a), as the case may be, and the total liabilities of that fund exceeds 11.8%, the maximum amount of the safety net of that fund, in respect of that year, shall be an amount equal to the product of 11.8% multiplied by the total liabilities of that fund as determined in the fund balance in respect of the calculation year, provided that the maximum amount of the safety net of that fund under this paragraph shall not be less than the amount derived from the aggregation of the following two:
(a)the higher of the following (in this paragraph – the utilised amount):
(1)the amount from the safety net of the veteran pension fund not in arrangement, as calculated under subsection (d) for that fund, in the previous year, plus the expected index change rate in respect of the calculation year and plus the risk-free interest rate in respect of the calculation year;
(2)the cumulative amount in the calculation year, or the maximum amount in the previous year plus index and interest, whichever is lower; for this purpose, "the maximum amount in the previous year plus index and interest" – the maximum amount of the safety net of the veteran pension fund not in arrangement, as calculated in the previous year under subsection (e)(1) or (2), or under this subsection, as the case may be, plus the index change rate according to which the fund balance in respect of the calculation year was calculated as against the index according to which the fund balance in respect of the previous year was calculated, and plus interest at the rate of 3.48% in respect of the calculation year;
(b)the difference between the maximum amount in the previous year plus index and interest and the utilised amount, when such difference is multiplied by 11.8% of the total liabilities of the fund as determined in the fund balance in respect of the calculation year and divided by the maximum amount in the previous year plus index and interest; for this purpose, "the maximum amount in the previous year plus index and interest" – as defined in sub-paragraph (a)(2);
(3)the Minister of Finance, with the approval of the Labour, Welfare and Health Committee of the Knesset, may determine that for the purposes of this section a veteran pension fund not in arrangement that amended its articles by the 13th day of Tevet 5778 (31 December 2017) shall be regarded as if it had amended its articles by the 18th day of Tevet 5773 (31 December 2012), subject to such restrictions and conditions as he may determine, including in respect of the reduction of the fund's liabilities.
(g)Funds from the safety net of a veteran pension fund not in arrangement shall be transferred to that fund only after all its assets have been exhausted, subject to the provisions of subsection (h), and in accordance with the Commissioner's instructions regarding the manner of transferring the funds, if given; for the purposes of this subsection, amounts due to the fund under this section shall not be regarded as assets of the fund.
(h)Funds from the safety net shall not be transferred to a veteran pension fund not in arrangement in an amount exceeding the amount required by the fund for the purpose of paying its liabilities.
(i)Notwithstanding the provisions of the actuarial balancing mechanism established in the articles of a veteran pension fund not in arrangement, in a calculation year in which an actuarial surplus arises in that fund, amounts due to the fund under this section shall not, for the purposes of the provisions of such mechanism, be regarded as assets of the fund; however, if an actuarial surplus arises in the fund after the rights of members in the fund have been reduced due to the actuarial balancing mechanism as aforesaid following the date of commencement of Amendment No. 33 (in this subsection – rights reduction), amounts due to the fund under this section shall be regarded as assets of the fund up to the lower of the following:
(1)the amount derived from the product of the following two:
(a)the fund's liabilities as they appear in the fund balance in which the actuarial surplus was presented;
(b)the rights reduction rate, divided by the rate derived from the positive difference between the rights reduction rate and 1;
(2)the maximum amount of the safety net of the fund under subsections (d) to (f), as the case may be.
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