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Financial Services Supervision Law (Provident Funds), 5765-2005

חוק הפיקוח על שירותים פיננסיים (קופות גמל), תשס"ה-2005

Published: 2005-08-10Consolidated Hebrew text as of 2026-07-27 · 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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Section E: Investment of Provident Fund Monies and Management of its Assets

Investment of provident fund monies§
26.
(a)A managing company shall invest the monies of the provident fund under its management in accordance with the investment policy of the fund as prescribed in the fund's articles and by the board of directors of the company and the investment committee, all subject to directives prescribed by the Minister with the approval of the Finance Committee; in Regulations pursuant to this section the Minister may prescribe maximum rates for investment in a specific asset or in types of assets to be prescribed, for one provident fund or for all provident funds under the management of the managing company, as well as conditions and restrictions on such investment and conditions for its execution; for this purpose, "investment" means purchase, sale, holding, granting of a loan and any other transaction.
(b)Without derogating from the provisions of subsection (a), a managing company shall invest its own monies and the monies of the provident funds under its management such that they do not hold more than ten percent of a particular type of means of control in a significant real corporation; for the purpose of calculating the rate of holding as aforesaid, holdings of a financial body controlled by the managing company shall not be counted; in this subsection, "significant real corporation" and "financial body" — as defined in section 32a of the Financial Services Supervision Law (Insurance).
Separation of assets and accounts§
27.
(a)A managing company shall hold and manage the assets of the provident fund under its management separately from its own property, for the benefit of the members in that fund.
(b)A managing company shall maintain a separate system of accounts for each provident fund under its management, and shall hold the assets of the provident fund separately from the assets of other provident funds.
(c)Notwithstanding the provisions of subsection (b), a managing company may, with the approval of the Commissioner and subject to such conditions as the Commissioner may direct, maintain a joint system of accounts for a provident fund for compensation, a personal provident fund for severance pay, a provident fund for investment and a provident fund for savings, or for any combination thereof, and hold their assets jointly.
(d)The Commissioner may issue directives regarding the manner of separating the accounts and assets of provident funds under the management of a managing company.
Provident fund accounts§
28.
(a)A managing company shall deposit cash of a provident fund under its management in an account with a banking corporation as defined in the Banking (Licensing) Law, 5741-1981, with a financial institution outside Israel engaged in receiving deposits and subject to the supervision of a person authorised for that purpose in that state, or with other bodies approved by the Commissioner and subject to such directives as the Commissioner may issue in that matter.
(b)A managing company shall maintain the securities accounts of the provident fund under its management with a person who is a member of the stock exchange in accordance with the stock exchange rules within the meaning of section 46 of the Securities Law, 5728-1968, or with other bodies approved by the Commissioner, and subject to such directives as the Commissioner may issue in that matter.
Directives regarding holding of assets§
29.

The Commissioner may issue directives regarding the holding and registration of provident fund assets.

Charge and attachment of provident fund assets§
30.
(a)Provident fund assets are not subject to attachment.
(b)A managing company shall not create a charge (security interest) over provident fund assets under its management, except for the purpose of carrying out a transaction on behalf of the provident fund, and subject to conditions prescribed by the Minister with the approval of the Finance Committee.
Participation of a managing company in a general meeting§
31.
(a)The Minister shall prescribe provisions regarding the participation of a managing company, on behalf of a provident fund under its management, in votes at a general meeting of a corporation in which the company holds voting rights by reason of the management of that provident fund's assets.
(b)A managing company shall publish the manner of its voting at a general meeting as referred to in subsection (a) and shall report thereon, as the Commissioner directs.
Expenses, management fees and distribution commission§
32.
(a)A managing company shall not collect from the assets of a provident fund under its management, from members' accounts in the fund, from payments transferred to the fund, or from the fund's payments to members or to employees of an employer-member or their beneficiaries, other than the following (in this section – expenses and management fees):
(1)management fees;
(2)direct expenses in respect of the execution of transactions in provident fund assets, as prescribed by the Minister;
(3)insurance premiums collected pursuant to the provisions of section 16(d)(6).
(b)The Minister, with the approval of the Finance Committee, shall prescribe the maximum amounts or rates of the expenses and management fees that a managing company is entitled to collect from assets, accounts or payments, as referred to in subsection (a).
(c)An industry-wide provident fund shall collect management fees according to the expenses it has actually incurred, subject to the maximum amounts or rates prescribed pursuant to subsection (b).
(d)A managing company, as well as a person who controls a managing company and a corporation controlled by such a person, shall not receive any benefit whatsoever, directly or indirectly, in connection with the management of a provident fund, beyond the expenses and management fees prescribed by the Minister pursuant to subsections (a) and (b).
(e)
(1)A managing company shall not pay a person a commission or any other consideration in respect of a member's joining a provident fund or continuing membership therein, or in respect of the deposit, withdrawal or transfer of monies from the fund, other than the following:
(a)a distribution commission to a pension adviser, as defined in the Pension Advisory and Marketing Law;
(b)a distribution commission to the holder of an insurance agent licence in the pension insurance branch as defined in section 28(a)(3) of the Financial Services Supervision Law (Insurance), to an investment adviser and to an investment marketer as defined in the Investment Advice, Investment Marketing and Investment Portfolio Management Law, 5755-1995;
(2)The Minister, with the approval of the Finance Committee, may prescribe conditions under which a managing company is entitled to pay a distribution commission as referred to in this subsection, and provisions regarding the maximum amount or rate of such a commission and the manner of its calculation.
(3)The distribution commission referred to in paragraph (1) shall not be calculated by reference to the rate of management fees that the managing company collects from a member.
(f)The Commissioner may direct a managing company, as well as a person or corporation as referred to in subsections (d) and (e), to refund expenses, management fees, a commission, consideration and any other benefit, if the Commissioner is of the opinion that they were collected or paid contrary to the provisions pursuant to this section.
Calculation of the value of provident fund assets§
33.
(a)A managing company shall calculate the value of the assets of a provident fund under its management, in accordance with directions given by the Commissioner according to the types of assets, the type of the fund and its purpose.
(b)The Commissioner may give directions regarding the manner of calculating the value of provident fund assets in special cases, including in the event of a suspension of trading on the stock exchange in a particular security or in securities generally.
Provident fund yield§
34.
(a)The Minister shall prescribe the manner of calculating the yield achieved by a provident fund on its assets.
(b)A managing company shall credit to the accounts of members in a provident fund under its management, which is of a type or for a purpose prescribed by the Minister, the profits and losses of the fund; the Minister shall prescribe the manner and time for crediting the profits and losses of the fund, including in respect of new monies deposited in members' accounts, as well as the conditions that shall apply to such new monies until the time prescribed by the Minister for crediting the profits and losses.

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Section E-1: Assurance of Yield Supplementation for Pension Funds

Purpose – Section E-1§
34a.

The purpose of this Section is to ensure yield supplementation for eligible pension funds by the State, in order to reduce the effect on the rights of their members arising from changes in the yields on their assets.

Definitions – Section E-1§
34b.

In this Section –

"designated bonds" means Arad-type bonds and Miron-type bonds;

"Miron-type bond" means a non-negotiable bond issued to veteran funds pursuant to the State Loan Regulations ("Miron" Series), 5740-1980;

"yield-guaranteed investment track" means a separate investment track in which the assets in respect of which the fund is entitled to yield supplementation assurance pursuant to section 34c shall be managed, characterised by investment restrictions set out pursuant to section 34c(c);

"existing entitled persons" means a person who was entitled to receive pension from a comprehensive new fund before the 7th day of Tevet 5764 (1 January 2004);

"examination month" means the month falling 60 months after the base month;

"base month" means a month in respect of which a calculation under section 34c(e) is performed;

"the determining month" means the month in which the determining date falls;

"the determining date" means the 2nd day of Tammuz 5782 (1 July 2022), or a later date set by the Minister pursuant to section 34f(d);

"entitled fund assets" means the assets of the entitled fund with respect to existing entitled persons and the other assets of the entitled fund;

"other assets of the entitled fund" means assets of an entitled fund that do not stand against its liabilities to existing entitled persons;

"assets of the entitled fund with respect to existing entitled persons" means assets of an entitled fund that stand against its liabilities to existing entitled persons;

"assets of the entitled fund in respect of which the fund is entitled to yield supplementation assurance" – as referred to in section 34c(b);

"veteran fund in arrangement" and "veteran fund not in arrangement" – as defined in the Financial Services Supervision Law (Insurance);

"tracked veteran fund" means a veteran fund not in arrangement in which two or more investment tracks are managed;

"entitled fund" means a veteran fund or a comprehensive new fund;

"dedicated yield supplementation fund" – as referred to in section 34e;

"the estimated value of the assets of an entitled fund" at a given date means the net estimated value of the assets of the entitled fund at that date in accordance with section 33 and the directions thereunder, and for the purposes of this Section the assets of a veteran fund shall also be estimated in accordance with those directions;

"the adjusted value" of the assets of an entitled fund in respect of which the fund is entitled to yield supplementation assurance means the value of the assets of an entitled fund in respect of which the fund is entitled to yield supplementation assurance, on the day from which those assets became entitled to yield supplementation assurance pursuant to section 34c(b), plus the target yield from that date up to each calculation day pursuant to section 34c(e);

"yield supplementation asset rate" means 30%, and for the purposes of existing entitled persons – 70%;

"target yield" means annual interest at a rate of 5.15%;

"cumulative target yield" for a given period means the target yield for a period of 60 months calculated according to the compound interest method, plus the rate of increase of the index of the month most recently published before the examination month compared with the index of the base month;

"total yield" of an entitled fund – as detailed below:

(1)for a comprehensive new fund or a tracked veteran fund – the cumulative gross nominal yield achieved by the fund in the yield-guaranteed investment track over 60 months on the assets in respect of which a yield supplementation assurance was given pursuant to section 34c in a given month, for the period commencing in that month and until the expiry of 60 months as aforesaid, and after deducting direct expenses for the execution of transactions in those assets in that track only;
(2)for a veteran fund in arrangement and a veteran fund not in arrangement that is not a tracked veteran fund – one of the following, and for the purpose of the cumulative nominal yield – yield in respect of a designated bond shall not be taken into account:
(a)the cumulative gross nominal yield achieved by the fund over 60 months on all its assets in a given month in respect of which the yield supplementation assurance was given pursuant to section 34c, for the period commencing in that month and until the expiry of 60 months as aforesaid, and after deducting direct expenses for the execution of transactions in the fund's assets only;
(b)where the Minister has prescribed directions pursuant to section 26(a) with respect to the investment of the assets of a veteran fund in arrangement in respect of which the fund is entitled to yield supplementation assurance – the cumulative gross nominal yield achieved by the entitled fund over 60 months on the assets in respect of which the yield supplementation assurance was given pursuant to section 34c in a given month, for the period commencing in that month and until the expiry of 60 months as aforesaid, and after deducting direct expenses for the execution of transactions in those assets only.
Yield supplementation for eligible funds§
34c.
(a)The Government shall transfer to an eligible fund, from the dedicated yield supplementation fund or from the state budget, yield supplementation at the times and under the conditions set out in this Section.
(b)On the first business day of each month commencing from the determining month, the eligible fund assets in respect of which the fund is eligible for guaranteed yield supplementation at that time, in addition to the eligible fund assets in respect of which the fund is eligible for guaranteed yield supplementation and for which a settlement pursuant to subsection (e) has not yet been carried out as of that time, shall be the sum of the following:
(1)in respect of persons who are not existing eligible persons – the product of the assets-for-yield-supplementation rate multiplied by the adjusted value of the other eligible fund assets on the first business day of the month, less the sum of the following two amounts:
(a)the adjusted value of the designated bonds issued to the eligible fund in respect of persons who are not existing eligible persons and that have not yet been redeemed as of the first business day of the month;
(b)the adjusted value of the other eligible fund assets in respect of which the fund is eligible for guaranteed yield supplementation and for which a settlement pursuant to subsection (e) has not yet been carried out, as of the first business day of the month;
(2)in respect of existing eligible persons – the product of the assets-for-yield-supplementation rate for existing eligible persons multiplied by the adjusted value of the eligible fund assets in respect of existing eligible persons on the first business day of the month, less the sum of the following two amounts:
(a)the adjusted value of the designated bonds issued to the eligible fund in respect of existing eligible persons and that have not yet been redeemed as of the first business day of the month;
(b)the adjusted value of the eligible fund assets in respect of existing eligible persons in respect of which the fund is eligible for guaranteed yield supplementation and for which a settlement pursuant to subsection (e) has not yet been carried out, as of the first business day of the month.
(c)Assets of an eligible fund that is a comprehensive new fund or a track veteran fund in respect of which the fund is eligible for guaranteed yield supplementation, as set out in subsection (b), shall be managed in a guaranteed-yield investment channel in the following manner:
(1)the investment of the monies shall be in accordance with the investment policy of the investment track in which one of the following applies (in this section – the determining track):
(a)the track in which the largest volume of assets is managed at the determining date;
(b)where the said track referred to in sub-paragraph (a) is closed or merged – the track in which the largest volume of assets is managed at the time the said track is closed or merged;
(c)another investment track to be selected in a manner prescribed by the Minister, with the approval of the Finance Committee, from among the investment tracks managed by the fund;
(2)for the purposes of the investment policy referred to in paragraph (1), any investment in designated bonds in the determining track, if any, shall not be taken into account;
(3)the investment of the monies in types of assets and in specific assets shall be carried out in a manner as identical as possible to the investment of the monies in the determining track, all except for investment in designated bonds and non-tradeable assets that were invested prior to the determining date;
(4)the Minister, with the approval of the Finance Committee, may prescribe provisions regarding investment as referred to in paragraphs (1) to (3).
(d)Notwithstanding the provisions of subsection (c), the Minister, with the approval of the Finance Committee, may prescribe pursuant to section 26(a) different provisions regarding the manner of managing investments in a guaranteed-yield investment channel as well as required adjustments to the maximum investment and holding rates prescribed pursuant to section 26, having regard to the increase in the fund's assets invested pursuant to the provisions of this Section.
(e)Upon the expiry of 60 months from each month following the determining month, each eligible fund shall furnish to the Government a detailed notice regarding the total yield it achieved during the said period, and the following provisions shall apply:
(1)where the total yield of the eligible fund during the said period exceeded the cumulative target yield, the eligible fund shall transfer to the dedicated yield supplementation fund the value of the difference between the total yield and the cumulative target yield, in respect of the eligible fund assets for which the fund is eligible for guaranteed yield supplementation;
(2)where the cumulative target yield exceeded the total yield of the eligible fund during the said period, the Government shall transfer to the eligible fund the value of the difference between the cumulative target yield and the total yield, in respect of the eligible fund assets for which the fund is eligible for guaranteed yield supplementation;
(3)transfers pursuant to paragraphs (1) and (2) shall be carried out no later than the end of the month following the month in which the settlement referred to in this subsection was made;
(4)where the amounts pursuant to paragraphs (1) or (2) are transferred after the date referred to in paragraph (3), the said amounts shall be transferred with the addition of a yield as detailed below in respect of the period of delay:
(a)in respect of delay by the State – the target yield;
(b)in respect of delay by an eligible fund – the total yield.
(f)The yield supplementation referred to in subsection (e) shall be paid from the monies accumulated in the dedicated yield supplementation fund; where no monies remain in the dedicated yield supplementation fund, the Government shall pay the yield supplementation from the state budget.
Stability of yield supplementation§
34d.

Without derogating from the provisions of section 34c, an eligible fund shall be entitled to guaranteed yield supplementation as referred to in that section in respect of assets for which a guarantee was given pursuant to that section, in accordance with the details set out below, even if the provisions of that section are amended after the date on which the guarantee of yield supplementation was given:

(1)guaranteed yield supplementation in accordance with the provisions of section 34c, as worded at the time the guarantee of yield supplementation was given, for those assets until the end of the period of 60 months from the date on which eligibility for guaranteed yield supplementation in respect of those assets commenced;
(2)guaranteed yield supplementation in accordance with the provisions of section 34c, as worded at the time the guarantee of yield supplementation was given, for those assets, for two additional periods of 60 months each, in accordance with the provisions of that section.
Dedicated yield supplementation fund§
34e.
(a)The Accountant General shall establish a dedicated yield supplementation fund.
(b)Monies transferred to the dedicated yield supplementation fund pursuant to section 34c shall be deposited in a separate account at the Bank of Israel, which shall be managed in Israeli currency and shall bear interest in accordance with an agreement between the Government of Israel and the Bank of Israel pursuant to section 48 of the Bank of Israel Law, 5770-2010.
(c)For the purpose of financing the dedicated yield supplementation fund, there shall be prescribed in the annual budget law, in a separate programme, in each of the years listed below, at least the amount obtained by multiplying the estimate of the total assets on 1 July of that year, and in respect of the year 2022 – on the 7th day of Kislev 5783 (1 December 2022), in respect of which all eligible funds are eligible for guaranteed yield supplementation, by the rate set out below, plus the average annual rate of change of the index in the five years preceding that year:
(1)in the years 2022 to 2025 – 3.15%;
(2)in the years 2026 to 2027 – 2.65%;
(3)in the year 2028 – 2.15%;
(4)in the year 2029 onwards – 1.95%.
(d)The monies of the dedicated yield supplementation fund shall not be subject to attachment, assignment or charge (security interest).
(e)The monies of the dedicated yield supplementation fund shall be used only as follows:
(1)for yield supplementation to eligible funds, pursuant to this Section;
(2)in respect of monies as referred to in section 34c(e)(1) – also for transfer to eligible funds.
Regulations – Section E-1§
34f.
(a)The Minister, with the approval of the Finance Committee, may prescribe provisions regarding the crediting of yield to members of the eligible fund and to recipients of a pension in respect of the yield supplementation referred to in this section, including in respect of the withdrawal of monies from the eligible fund, the receipt of a pension, the transfer of monies from an eligible fund to another provident fund, or the transfer of monies from one investment track to another investment track within the same eligible fund; the initial Regulations pursuant to this subsection shall be brought for the approval of the Finance Committee no later than the 28th day of Adar II 5782 (31 March 2022).
(b)The Minister may prescribe provisions on the following matters:
(1)settlement between eligible funds with respect to yield supplementation on assets transferred between one eligible fund and another;
(2)settlement with an eligible fund in respect of assets for which 60 months have not yet elapsed from the date on which the guarantee of yield supplementation pursuant to section 34c was given.
(c)The Minister may postpone the determining date for a period not exceeding four months, provided that the postponement is carried out no later than the 27th day of Adar I 5782 (28 February 2022).
Report to the Government and the Knesset§
34g.
(a)No later than 30 May of each year, the Minister shall furnish to the Government and to the Finance Committee a detailed report on the implementation of the provisions of this Section, including particulars regarding the dedicated yield supplementation fund pursuant to section 34e, and whether adjustments to the budget rates referred to in section 34e(c) are required (in this section – the report).
(b)The Finance Committee shall hold a discussion on the report.
(c)The Minister shall publish the report on the website of the Ministry of Finance.

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