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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Chapter II: Managing Company
Section A: Licensing of a Managing Company
Managing Company Licence§
4.
(a)The Commissioner may grant a licence to engage in the management of provident funds to a company in which all of the following conditions are met:
(1)it is a company as defined in the Companies Law, 5759-1999;
(2)its exclusive occupation is the management of provident funds; however, it may engage in another occupation relating to a pension product, as defined in section 1 of the Pension Advisory and Marketing Law (in this paragraph – pension product), which the Commissioner has approved and subject to the conditions approved by the Commissioner, provided that that occupation is regulated pursuant to the provisions of this Law, the Financial Services Supervision Law (Insurance) or the Pension Advisory and Marketing Law, and it may also engage in basic initiation service as defined in the Regulation of Engagement in Payment Services and Payment Initiation Law, 5783-2023, relating to a pension product; the Commissioner, after consulting the Committee, may give additional directions regarding exclusive occupation as aforesaid;
(3)its equity capital is not less than an amount prescribed by the Minister and on the conditions prescribed by the Minister; however, in a company managing only sectoral provident funds, equity capital shall only be required of a managing company that assumes a financial risk liable to jeopardise its ability to meet its obligations to members in the absence of equity capital, and the Minister of Finance has determined, with the approval of the Finance Committee, that by reason of such a risk there is a need for an equity capital requirement, in the amounts and on the conditions to be prescribed for that purpose; a financial risk that falls within the scope of the activity existing in sectoral provident funds at the time of the commencement of this Law shall not be regarded as a risk requiring an equity capital requirement; the Commissioner may, after consulting the Committee, give directions regarding the manner of investment of the equity capital required under this paragraph, in whole or in part;
(4)the company holds types of insurance prescribed by the Commissioner, after consulting the Committee, in the amounts, at the rates and on the conditions prescribed by the Commissioner.
(b)In granting a managing company licence, the considerations listed in section 17 of the Financial Services Supervision Law (Insurance) shall be taken into account, with the necessary modifications; however, in respect of a company managing only sectoral provident funds, paragraphs (3) and (4) of that section shall not apply.
(c)The Commissioner shall not refuse to grant a managing company licence to a company in which the conditions listed in subsection (a) are met, except after consulting the Committee, and after the company has been given an opportunity to state its arguments before the Committee in the manner directed by the Committee.
Application for a Licence§
5.
(a)A company wishing to engage in the management of provident funds shall submit to the Commissioner a written application for a managing company licence on a form directed by the Commissioner; the application shall be accompanied by the company's incorporation documents as well as particulars regarding –
(1)the provident funds that the company wishes to manage and their principal characteristics;
(2)the office holders in the company and their business background;
(3)the controlling shareholders in the company, their business background and the financial resources at their disposal;
(4)the company's plan of action regarding the management of the provident funds and the manner of its preparation for such management, including with respect to the marketing of the provident funds and entering into agreements with service providers.
(b)The Commissioner may require from the applicant company additional data and documents beyond those listed in subsection (a), to the extent that the Commissioner deems necessary for the purpose of reaching a decision on its application.
Conditions in a Licence and Amendments§
6.
The Commissioner may prescribe conditions and restrictions in a managing company licence, and may amend them at any time, provided that an amendment not made at the request of the managing company shall be made after consulting the Committee, and after the company has been given an opportunity to state its arguments before the Committee in the manner directed by the Committee; the Minister may prescribe additional conditions in such a licence.
Licence to Manage a Pension Fund or a Central Provident Fund for Pension§
7.
Notwithstanding the provisions of sections 4 and 5, a company wishing to manage a pension fund or a central provident fund for pension shall submit an application to obtain an insurer's licence as referred to in section 15(a1) of the Financial Services Supervision Law (Insurance), and the insurer's licence granted in accordance with the provisions of that section shall be deemed a managing company licence in respect of all the provident funds under its management.
Expiry and Revocation of a Licence§
8.
(a)If a managing company has not commenced managing a provident fund by the end of the period prescribed for that purpose in the managing company licence – the licence shall expire.
(b)The provisions of sections 22 and 23 of the Financial Services Supervision Law (Insurance) shall apply, with the necessary modifications, to the revocation of a managing company licence.
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Contact Us →Section B: Means of Control in a Managing Company
Control and Holding of Means of Control in a Managing Company§
9.
(a)No person shall hold more than five percent of a particular type of means of control in a managing company, or a higher rate as the Minister may prescribe by Order, except pursuant to a permit granted by the Commissioner.
(b)No person shall control a managing company except pursuant to a permit granted by the Commissioner; the Minister may, for special reasons, prescribe conditions for the granting of permits as aforesaid.
(b1)A person who holds a permit pursuant to subsection (b) to control a managing company, as well as a person who holds a permit pursuant to section 32(b) of the Financial Services Supervision Law (Insurance) to control an insurer holding a licence as referred to in section 15(a1) of that Law, who also manages a provident fund that is not a pension fund or that is not a central pension provident fund, shall not be granted an additional permit pursuant to subsection (b) to control a managing company, except in accordance with rules prescribed by the Commissioner.
(c)The provisions pursuant to Section F of Chapter III of the Financial Services Supervision Law (Insurance) that apply in respect of control and means of control in an insurer shall apply, with the necessary modifications, in respect of control and means of control in a managing company, including in respect of a permit granted pursuant to subsection (a) or (b); however, in respect of the granting of a permit concerning control and means of control in a company that manages only industry-wide provident funds, paragraphs (3) and (4) of section 17 of the Financial Services Supervision Law (Insurance) shall not apply; the Minister, with the approval of the Finance Committee, may prescribe reliefs in respect of the application of the provisions of the said Section to a managing company, by way of prescribing modifications and adjustments to the application of the said provisions, in whole or in part, to such a company, or by prescribing that these provisions, in whole or in part, shall not apply to it.
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Contact Us →Section C: Organs and Other Office Holders in a Managing Company
Organs and Other Office Holders in a Managing Company§
10.
(a)The provisions pursuant to Section A-1 of Chapter IV of the Financial Services Supervision Law (Insurance) in respect of organs and other office holders in an insurer, except section 41e in the said Section, shall apply, with the necessary modifications, in respect of organs and office holders as aforesaid in a managing company, except an investment committee, and the provisions pursuant to Section A-2 of Chapter IV of the Financial Services Supervision Law (Insurance) shall likewise apply, with the necessary modifications; the Minister, with the approval of the Finance Committee, may prescribe reliefs in respect of the application of the provisions of the said Sections to a managing company, by way of prescribing modifications and adjustments to the application of the said provisions, in whole or in part, to such a company, or by prescribing that these provisions, in whole or in part, shall not apply to it.
(b)Notwithstanding the provisions of subsection (a), the Commissioner shall not object to an appointment and shall not direct the termination of tenure of an office holder in a company that manages only industry-wide provident funds pursuant to the provisions of section 41j of the Financial Services Supervision Law (Insurance), as applied under subsection (a), unless that office holder does not meet the eligibility conditions, restrictions and conflicts of interest prohibitions, to the extent that any have been prescribed in respect of that office holder in Regulations pursuant to section 41h or pursuant to section 41i of the said Law or pursuant to section 11(d) or pursuant to section 12, as the case may be, and subject to the reliefs prescribed pursuant to subsection (a), to the extent that any have been prescribed.
Investment Committee of a Managing Company§
11.
(a)The board of directors of a managing company shall appoint an investment committee for each provident fund under the company's management, and it may appoint a single investment committee for several provident funds as aforesaid; a majority of the members of the investment committee shall be persons who are eligible to serve as external directors (in this Law – external representatives), and the board of directors may also appoint as a committee member a person who is not a director of the managing company; in an investment committee of an industry-wide provident fund, the external representatives may constitute a minority, provided that their number shall not be less by more than one than the number of the other members of the committee.
(b)The functions of the investment committee are:
(1)to determine the investment policy of the provident fund within the framework of the overall investment policy determined by the board of directors;
(2)to determine the types of transactions that require prior approval of the investment committee before their execution, as well as the holding rates in securities of various types that require such approval before their acquisition;
(3)to determine the underlying assets of options and futures contracts that may be purchased or created within the framework of the investments of the provident fund;
(4)to determine the maximum rate of collateral that may be provided in respect of transactions in options and futures contracts and in respect of short sales carried out within the framework of the investments of the provident fund;
(5)to determine the types of securities that may be sold short within the framework of the investments of the provident fund;
(6)to guide the office holders engaged in the investments of the provident fund in the implementation of the investment policy determined pursuant to paragraph (1), and to supervise them, and if the board of directors has determined that part of the management of the investments of the provident fund shall be carried out otherwise than directly by the managing company – to guide the entities actually managing the investments, to issue instructions to such entities in respect of the implementation of the investment policy, and to determine the manner of supervision over them;
(7)to determine benchmarks for examining the implementation of the investment policy determined pursuant to paragraph (1);
(8)to formulate rules and procedures for the management of the investments of the provident fund;
(9)to make decisions concerning the use of means of control in corporations held in the provident fund;
(10)to perform any other function assigned to it by the board of directors or the Commissioner.
(c)The board of directors of a managing company is not entitled to assume for itself the powers of the investment committee; the investment committee is not entitled to delegate its powers to another, including to sub-committees, except in matters and circumstances directed by the Commissioner, after consultation with the committee.
(d)The Minister, with the approval of the Finance Committee, may prescribe provisions in respect of the following matters:
(1)the number of members of an investment committee and its composition;
(2)eligibility conditions for tenure required of a member of an investment committee, including accounting and financial expertise, and additional eligibility conditions required of an external representative, the chairperson of an investment committee and that person's alternate;
(3)restrictions in respect of the appointment of a member of an investment committee, including restrictions by reason of that member's other occupations;
(4)the manner of appointment of a member of an investment committee and provisions in respect of the termination or lapse of that member's tenure;
(5)the quorum at meetings of an investment committee;
(6)decisions that must be made by a special procedure or by a special majority;
(7)dates or events at which an investment committee shall convene.
(e)The Commissioner may issue directions regarding the working methods of an investment committee, to the extent that they have not been prescribed in Regulations pursuant to subsection (d).
(f)In this section –
"option" and "futures contract" – as defined in section 64(b) of the Joint Investment in Trust Law;
"short sale" means the sale of a security that does not belong to the seller;
"underlying asset" means the asset that is the subject of the obligation in an option or a futures contract.
Prevention of Conflicts of Interest§
12.
(a)No person shall be appointed to or serve as a member of an investment committee if that person's other functions or occupations create or are liable to create a conflict of interest with that person's function as a member of the investment committee, or if they are such as to impair that person's ability to serve as such a member.
(b)The Minister, with the approval of the Finance Committee, may prescribe provisions the purpose of which is to prevent a possible conflict of interest of a member of an investment committee, including provisions in respect of other occupations in which a member of an investment committee shall not be permitted to engage or actions that that member shall not be permitted to perform, as well as declarations and reports that shall be required of that member.
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Contact Us →Chapter III: Provident Fund
Section A: Approval of a Provident Fund
Approval of a Provident Fund§
13.
(a)The Commissioner may approve a fund in respect of which an application has been submitted by a managing company pursuant to the provisions of section 14, as a provident fund for compensation, for severance pay, for pension, for investment, for annual leave or for sick pay, as a central provident fund for participation in a budgetary pension, as a study fund or as a provident fund for another purpose, provided that –
(1)approval as a provident fund for annual leave shall be granted only in respect of a fund established pursuant to the Annual Leave Law, 5711-1951;
(2)approval as a personal provident fund for sick pay shall be granted only in respect of a fund that operated lawfully as a provident fund as aforesaid from tax year 2003 onwards;
(3)approval as a provident fund for another purpose shall not be granted in respect of a fund intended for the payment of holiday pay, accident pay, and other similar payments, unless the fund operated lawfully as a provident fund as aforesaid from tax year 2003 onwards.
(4)approval as a provident fund for compensation or as a personal provident fund for severance pay shall be granted only in respect of monies deposited in a provident fund for compensation or in a personal provident fund for severance pay, as the case may be, in respect of tax years preceding tax year 2008, only;
(5)approval as a central provident fund for severance pay shall be granted only in respect of a fund that operated lawfully as a central provident fund for severance pay from tax year 2007 onwards, and in respect of monies deposited in such a fund in respect of tax years preceding tax year 2011, in which the conditions set out below were fulfilled, only:
(a)the deposit of the monies is by an employer-member who was a member of such a provident fund in December 2007;
(b)the deposit of the monies is in respect of an employee of an employer-member as referred to in sub-paragraph (a), on whose behalf monies were deposited in the provident fund for the month of December 2007.
(b)In addition to the provisions of subsection (a), the Commissioner may approve an insurance plan in respect of which an application has been submitted by an insurer pursuant to the provisions of section 14, as a provident fund for compensation, for severance pay or for pension; however, approval as a provident fund for compensation or for severance pay shall be granted only in respect of monies deposited in a provident fund for compensation or in a personal provident fund for severance pay, as the case may be, in respect of tax years preceding tax year 2008, only.
(c)
(1)approval of a provident fund for a fund and for an insurance plan shall be granted to them for the first time with the consent of the administrator as defined in the Income Tax Ordinance [New Version] (in this section – the administrator);
(2)the Commissioner may grant a single provident fund approval for several individually managed provident funds managed by the same managing company or by the same insurer, subject to conditions that the Commissioner shall direct, provided that the granting of such approval for the first time shall be with the consent of the administrator.
(d)The Commissioner may make the approval of the provident fund conditional upon conditions, and may prescribe conditions and restrictions in the approval.
(e)The period of validity of a provident fund approval is three years from the date on which it was granted, unless the Commissioner has prescribed a shorter period in the approval.
Application for Approval§
14.
(a)An application for approval of a provident fund shall be submitted by a managing company or an insurer, and shall include the particulars, approvals and other documents as prescribed by the Minister.
(b)A draft of the rules of the provident fund shall be attached to an application as referred to in subsection (a) submitted by a managing company; the insurance plan shall be attached to an application as aforesaid submitted by an insurer.
(c)The Commissioner may require the applicant to provide additional data and documents beyond those prescribed pursuant to the provisions of subsections (a) and (b), to the extent that the Commissioner deems necessary for the purpose of making a decision on the application.
Revocation of Approval§
15.
The Commissioner may revoke a provident fund approval if a condition of the approval or a provision pursuant to this Law or an administrative instruction issued by virtue thereof has not been complied with.
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