Aged-adjusted pension plan, evidence from Israel

Abstract

ABSTRACT We investigate the results of the Israeli pension reform that started at the beginning of 2016. This reform created aged, adjusted pension plans that are aimed to fit better the different age categories and protect the over 60 years old savers from the occurrence of a financial crisis close to their retirement. We find that all the over 60 years old funds have outperformed the financial market according to their preferred level of risk. On the other hand, because the financial market blossomed in recent years, they lost a yearly potential return of 1.64%. The pension tracks for under 50 years old savers have gained an extra of 0.73% return per year; however, not all funds in this age category have outperformed the market benchmarks. The reform did not have a substantial impact on the 50–60 years old track since the risk ingredient has not changed dramatically.