Commentary: Let’s protest about pensions too

In contrast to their parents and older workers, young workers have no pension rights and no safety net of any kind.

By AVI TEMKIN / GLOBES
The protest movement has hit Israel’s streets to demand a welfare state and far-reaching changes in a wide range of areas. A lot of topics are being discussed at the protesters’ tent camps around the country, but the issue of pensions is not one of them.
It is no surprise that pensions are not on the agenda of the young protesters, as pensions are not on their horizon. People forget things that are remote and abstract, not to mention a subject that is loaded with mathematical formulas and legal terms that are hard to understand and far from the protesters’ world.
The protests’ leaders are young men and women – strong, healthy and at the start of their careers. They claim that the current economic arrangements are unfair and unjust.
The tent protesters say they want social justice and to restore Israel’s values as a welfare state.
Welfare is not only measured by fulfilling immediate material needs, such as an inexpensive home, discounts for diapers and affordable student dorms. Welfare is also worrying about a future when the protesters will no longer be young, healthy and strong, but when they are on the threshold of ending their lives as productive workers; in other words, when they retire.
The right to a pension is fair, and every worker deserves one.
In a series of measures beginning in 1995, the government has been transferring all its pension responsibilities onto its citizens. The directives apply to everyone who has joined the workforce since that year.
Until then, employees set aside money for Histadrut-run pension funds, buying pension rights calculated on the basis of their income and seniority.
It was correctly argued that this system was problematic. There was a huge actuarial deficit, and strong workers committees extorted improved terms at the expense of weak committees. But the principle of shared risk between the individual and the pension fund was wise and absolutely just.
Since 1995, the source of employees’ pensions is only money that people can accumulate and the return on it. In contrast to their parents and older workers, young workers have no pension rights and no safety net of any kind.
The individual must ensure a minimum provision for himself or herself and personally ensure appropriate rates. In other words, the government has abandoned any responsibility for pensions for its citizens and created a situation in which the individual bears the entire risk of his or her pension. The citizen – a worker who becomes a pensioner – has to personally bear the cost of miscalculations or low economic growth.
The risk from rising life expectancy and falling birth rates, which increase the number of retirees at the expense of working people who finance them, or from financial disasters, come at the individual’s expense.
The generation protesting in the streets today, whose leaders are all under 30, are liable to discover that on the day they retire from the labor force, their income is reduced and mostly dependent on old-age pensions from the National Insurance Institute.
That is why I ask you to add to your list of demands, which the media is reporting you are formulating, a critical and material correction to the pension system.
Workers should be allowed to personally have a degree of guaranteed pension rights, which are calculated on the basis of income and seniority, in addition to the current savings component. This will prevent an actuarial deficit, while increasing workers’ pension security. The current management mechanism, Amitim, which manages the nationalized senior pension funds on behalf of the state, could run the system.
Only a long-term savings system for individuals on one hand, and pension rights that are independent of the amount of savings on the other, will permit a properly balanced pension. Only this will give a safety net for people under 40, so that the economic rights they want to achieve will continue into retirement.