Correspondence: Ilanit Gavious, Department of Business Administration, Guilford Glazer School of Business and Management, Ben-Gurion University, PO Box 653, Beer-Sheva 84105, Israel

¹is an assistant professor of accounting in the Department of Business Administration at Guilford Glazer School of Business and Management, Ben-Gurion University. She is a certified public accountant and has operated as Senior Accountant at a Big-4 accounting firm (Deloitte & Touche) and at a leading commercial bank in Israel.

²is a professor of economics at Ben-Gurion University. He served as chairman of the third largest pension fund in Israel and as the Deputy Governor for the Bank of Israel.

³is an associate professor of actuarial science at Ben-Gurion University. In addition to his academic research, he has provided expert actuarial opinions to various public and private entities, such as pension funds, insurance companies, and so on, since 1997.

Received 21 October 2008; Revised 21 October 2008.

Abstract

This study proposes pension reform in Israel under legislation of a mandatory pension law covering all workers by funded pension plans. Referring to a mandatory pension coverage law rather than a national pension implies that pensions are paid by private entities and are not part of the government system. The rate of ageing of Israel's population is slower than most of the Western world, and this opens a demographic window of opportunity to savings for funded pensions. The proposed reform aims to promote greater social equality as well as transparency. New data and actuarial calculations are presented, as well as estimates of the budgetary expenses, to substantiate the claim that such legislation is needed.