Over a year has passed since the release of the interim report of the "Arbitrage Committee", which was set up by then director general of the Ministry of Finance Shlomi Heisler to formulate a comprehensive reform of the savings sector. The focus was consolidation of several financial products on one platform enabling comparison of the tax benefits of each: investment provident funds, savings policies, and mutual funds. The Ministry of Finance is due to publish the final draft of the recommendations tomorrow (Wednesday).
The main rationale behind the move is to make it easier for the public to transfer money from bank current accounts to interest bearing instruments. When all the instruments are under one roof, it will be easier for the public to compare them. By contrast with the current situation, transferring money between the various products on the platform will not be a tax event, and when money is withdrawn there will be a degree of exemption from capital gains tax for those who make a withdrawal after age 60 in the form of a monthly pension payment, in a similar way to the investment provident fund model today. This represents a significant change in the management of the public’s short- and medium-term savings, which currently amount to some NIS 900 billion.
The new model involves sharing the tax benefit currently given to investment provident funds between all the products in the new investment account. For savers who have become accustomed to depositing large sums in investment provident funds in return for a tax benefit at age 60 that can be worth millions of shekels (the current ceiling for investment in these funds is about NIS 83,000 annually per person), this will be a hard blow.
On the other hand, the benefit will be divided more equally and will apply to other savings instruments as well. As far as is known to "Globes", the ceiling for the benefit per saver, which as mentioned can reach millions of shekels in exceptional cases, will be in the hundreds of thousands of shekels.
Securities Authority versus Capital Markets Authority
Behind the scenes, two camps formed among the committee members in the course of their deliberations. On one side stood the Israel Securities Authority, which very much supports the measure and sees it as an engine of competition. On the other side stood the Capital Market, Insurance and Savings Authority, which argued that the new structure was actually liable to harm the public and result in people paying more commissions.
Last November, one of the main issues dividing the committee members was resolved, namely what will happen to the investment provident funds currently managed outside of the trading accounts? Under the compromise reached, it will be possible to continue offering these funds independently, outside of the account, if the tax benefit is cut and made equal to the new model that will be introduced.
The committee comprises Capital Markets, Insurance and Savings commissioner Amit Gal, Israel Securities Authority chairperson Seffy Zinger, Israel Tax Authority director Shai Aharonovich, deputy chief economist Moran Moshe-Jantzis, deputy budgets commissioner Tamar Levy Boneh, and deputy accountant general Gil Cohen.
The committee’s interim report was published earlier this year, and now, just weeks before the Knesset will be dissolved and over two years since the committee was first convened, its conclusions will be released. A financial reform on this scale will require legislation, which will have to wait until the next Knesset.
Published by Globes, Israel business news - en.globes.co.il - on June 30, 2026.
© Copyright of Globes Publisher Itonut (1983) Ltd., 2026.
