How much goes into an Israeli pension each month?

Israel mandates a combined 18.5% of salary into a keren pensiya: 6% from the employee, 6.5% from the employer plus 6% employer severance (pitzuim), giving 18.5% total. The calculator uses this combined rate by default but you can override it if your plan differs.

What is a keren hishtalmut?

A keren hishtalmut is an education/savings fund, often funded jointly by employee and employer, whose growth is tax-exempt up to a ceiling if held at least six years. It is optional, so the tool lets you add a separate monthly contribution that compounds alongside your pension.

How is the monthly pension worked out from the pot?

Israeli annuity pensions divide the accumulated pot by a mekadem (conversion factor) — roughly 200 for a man retiring at 67, meaning the pot is paid out over about that many months. The tool divides your final pot by this factor to estimate the gross monthly pension.

Does this include the Bituach Leumi old-age allowance?

No. This models only your funded pension and savings. Israel also pays a separate Bituach Leumi (National Insurance) old-age allowance, which is a flat state benefit added on top and is not part of this calculation.

Are the projected figures guaranteed?

No. They assume a constant salary, a steady investment return and a fixed annuity factor, none of which hold exactly in reality. Markets fluctuate, salaries change and conversion factors are revised. Treat the result as an illustrative projection, not a promise.

Israel Pension & Retirement Calculator

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This Israel pension and retirement calculator projects the retirement income you are building through Israel’s mandatory pension system. It applies the 18.5% combined keren pensiya contribution, compounds every monthly payment at your chosen return to retirement age, and converts the resulting pot into a monthly annuity using a realistic conversion factor.

How it works

Israel requires a combined 18.5% of gross salary to go into a pension fund (keren pensiya): 6% employee, 6.5% employer and 6% employer severance. Each month that contribution is invested.

The tool compounds every monthly contribution from your current age to retirement at your assumed annual return. The future value of a stream of monthly deposits is the sum of each deposit grown by the months remaining:

pot = Σ contribution × (1 + r_monthly)^(months_remaining)

where r_monthly = annualReturn / 12. An optional keren hishtalmut contribution is compounded the same way and added on.

To turn the pot into income, Israeli annuity pensions divide by a mekadem (conversion factor), typically around 200 for retirement at 67:

monthly_pension = final_pot / conversion_factor

Example

A 30-year-old on ₪15,000/month retiring at 67, with a 4% return and the default 18.5% rate and 200 factor, contributes ₪2,775 a month. Over 37 years of compounding that builds a substantial pot; dividing by 200 gives the estimated monthly pension. Adding a ₪1,000 keren hishtalmut raises both the pot and the income.

Notes

This excludes the separate Bituach Leumi state old-age allowance, ignores salary growth and assumes a fixed return and conversion factor. The mandatory rate and the mekadem are simplifications of a system that varies by fund, gender, retirement age and survivor options. Use it to compare scenarios, not as financial advice.