Pension contributions: from which day, how much, and how to check

Service page: Payslip review by a lawyer and CPA.

Every month your payslip shows a line for “pension deduction”, and you may be wondering: does the employer actually transfer it? Is it obliged to? And what do you do if it does not? The situation is clear: there is a law, there is a duty, and there is a way to enforce it.

Your employer does not make pension contributions? That is a breach of the extension order

The duty of pension insurance in Israel does not come from a law by that name, but from the Extension Order for Comprehensive Pension Insurance in the Economy: an order issued under the Collective Agreements Law, 5717-1957 (חוק הסכמים קיבוציים, התשי״ז-1957), which came into force in January 2008 and was gradually extended. Today the order applies to employers and employees in Israel, except for the exceptions in it (section 4A of the order in its consolidated version; see the table below). An employee who was already insured with any pension insurance when hired is entitled to contributions from the first day of work (the contributions are actually made after 3 months of work or at the end of the tax year, whichever is earlier, retroactively: section 6E of the order in its consolidated version). An employee with no previous pension insurance is entitled after 6 months of work.

The source of the duty: the Extension Order for Mandatory Pension (צו הרחבה לפנסיה חובה) of 2008, and further extension orders that widened its application. Alongside the civil sanction (retroactive payment), there is also criminal exposure under the Wage Protection Law, 5718-1958, for example when the employer deducted amounts from the employee’s wages and did not transfer them to the fund (section 25B(c)).

Exactly how much must be contributed, and from which day?

The minimum contribution rates under the Extension Order on Increasing Pension Insurance Contributions in the Economy (2016) are:

Employer: 6.5% of the wages for the benefits component, plus 6% for the severance component (that is, a total of 12.5% at the employer’s expense, starting from the January 2017 salary). A deposit of 8.33% for severance is possible by agreement, but it is not the minimum in the order.

Employee: 6% of the wages (deducted on the payslip).

These rates are a minimum. Collective agreements, personal employment agreements and a high wage level can increase them. You cannot go below the minimum.

The wage for the calculation: the “determining wage” as defined in the agreement that applies to the employee, and not less than the insured wage under the pension order, which is the employee’s wages and their components within the meaning of the Severance Pay Law, 5723-1963 (חוק פיצויי פיטורים, התשכ״ג-1963), and the regulations under it, up to the average wage in the economy (section 2A of the 2016 order; sections 6B and 6C of the order in its consolidated version).

A hypothetical example: (by the rates in force from the January 2017 wages, as of 4 October 2026) on a determining wage of NIS 9,100 a month: a deduction from the employee of 6% = NIS 546, benefits from the employer of 6.5% = NIS 591.50 and severance from the employer of 6% = NIS 546; together NIS 1,683.50 (18.5%) to the fund every month.

A higher rate set by law or by an agreement that applies to the employee continues to apply (section 4 of the 2016 order). The amounts in the example are calculated from the rates in the table; see also a sample payslip, which shows the same contributions.

Who is required: only employees, or also independent contractors?

The duty applies to employees. For self-employed people engaged as “contractors” or “freelancers”, the question is whether they are in fact employees. The labor courts in Israel look at reality, not at the title in the contract. A worker engaged as “self-employed” who does not set their own hours, does not charge VAT, and works exclusively may be classified as an employee for pension purposes.

If you are “self-employed” and feel that in practice you are an employee, it is worth checking.

What do you do if the employer doesn’t make contributions?

Step 1: check the payslip. The pension contributions should appear as a deduction from the employee and an addition from the employer. If one of them is missing, there is a problem. This is what a payslip review by a lawyer and CPA looks like.

Step 2: check with the pension fund. Contact your pension fund directly and ask for an account statement. If the contributions did not arrive, that statement is the evidence you will need.

Step 3: file a complaint. You can contact the labor law enforcement unit at the Ministry of Labor. You can also go directly to the Labor Court with a claim for payment.

Step 4: a civil claim. An employee may sue the employer for every amount that was not contributed, plus interest. Usually you do not need a lawyer for claims of relatively small amounts in the Labor Court.

What are the sanctions on an employer who breaks the law? An employer that does not make pension contributions is exposed to a claim for the missing contributions. An amount the employer owes to a provident fund and that was not paid to it on time is treated as “delayed wages”, under the conditions in section 19A of the Wage Protection Law. An employer that deducted amounts from the employee’s wages and did not transfer them to the body they were intended for, for example the fund, commits an offense (section 25B(c) of the Wage Protection Law). “Payments under extension orders on pensions” are also listed in Part C of the Second Schedule to the Increased Enforcement of Labor Laws Law, 5772-2011 (חוק להגברת האכיפה של דיני העבודה, התשע״ב-2011) (item 15). So for such a breach, the commissioner under that Law may impose on the employer a monetary sanction set in the Law at NIS 35,000 (NIS 17,500 for an individual who employs workers not in the course of a business, a profession or public activity), which is index-linked and updated on 1 January each year. In 2026 it is NIS 42,100 (NIS 21,050 for an individual) (sections 3(3) and 9(b) of the Law; notice in Yalkut HaPirsumim 14188, p. 3338). For a continuing breach, one fiftieth of the sanction is added for each day it continues (section 4(a)). The sanction does not affect the employee’s right to claim the contributions themselves (section 47).

How do you check that the pension is actually being paid in?

The simplest way: log in to your pension fund’s website and check the latest activity. Most funds allow you to log in with an identification method, and you can see every deposit there.

If you do not have access, call the fund. They must give you information about your account. Every employee is entitled to an annual report.

Practical advice: check once a quarter. If a contribution did not arrive even once, ask straight away. A delay of a month is still an easy fix. A delay of a year already needs a legal approach.