On May 23, 2016, the Minister of the Economy issued an expansion order (the "Expansion Order") confirming that the terms of the February 23, 2016 collective agreement entered into by the Manufacturer's Association and the Histadrut Labor Federation, will apply to the general workforce.
Under the Expansion Order, the contribution requirements for pension arrangements – whether through pension funds or managers insurance -- will be increased as follows:
For the period from July 1, 2016 until December 31, 2016:
- Employees will contribute 5.75% of their monthly salary to either pension arrangement; and
- Employers will contribute at least 6.25% of the employee's monthly salary to either pension arrangement (which, under the manager's insurance arrangement, is composed of contributions to both the pension fund and disability insurance, subject to additional conditions below).
From January 1, 2017:
Employees will contribute 6% of their monthly salary to either pension arrangement; and Employers will contribute at least 6.5% of the employee's monthly salary to either pension arrangement (which, under the manager's insurance arrangement, is composed of contributions to both the pension fund and disability insurance, subject to additional conditions below).
The Expansion Order further stipulates that under the manager's insurance arrangement, an employer must contribute a minimum of 5% of the employee's monthly salary towards the pension fund, independent of the contribution to the employee's disability insurance, provided that an employer will not be required to contribute more than a total of 7.5% of the employee's monthly salary under such arrangement, even in the event that cost of disability insurance would exceed employee's monthly salary.
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