Question 1

What happens to my pension fund when I am dismissed?

Accepted Answer

On dismissal, the balance accumulated in your pension fund becomes accessible to you. Under Section 14 arrangements (now standard for most Israeli employees), the pension fund balance — including both employee and employer contributions — constitutes your severance pay. You can withdraw the balance (subject to tax on the employer's portion) or transfer it to a new pension fund.

Question 2

What is a Section 14 arrangement and how does it affect severance?

Accepted Answer

Section 14 of the Severance Pay Law allows an employer to make pension contributions in lieu of direct severance pay, provided the employee agreed in writing. Under a full Section 14 arrangement, the employer contributions in the pension fund satisfy the severance pay obligation entirely — the employer does not pay a separate severance amount on dismissal.

Question 3

Does the Section 14 arrangement apply to my entire service period?

Accepted Answer

Not necessarily. Section 14 coverage must have been applied from the start of employment or from the date a valid Section 14 agreement was signed. If coverage was partial — for example, only 72% of salary was covered — the employer owes a separate top-up payment for the uncovered portion. Reviewing the Section 14 agreement carefully is important.

Question 4

Can I withdraw my pension funds immediately on dismissal?

Accepted Answer

The portion of the pension fund that constitutes your severance pay (employer contribution under Section 14) is generally accessible on dismissal without penalty. The portion representing your own pension savings (employee contribution) is subject to standard pension withdrawal rules — early withdrawal before retirement age is generally taxable and subject to penalties. Financial advice is recommended.

Question 5

What if my employer did not enrol me in a pension fund at all?

Accepted Answer

An employer who failed to enrol you in a pension fund as required since 2008 owes all missed contributions — up to 7 years retroactively — plus interest. This is a serious violation. Adv. Elmaliach pursues these claims before the Labor Tribunal.

Question 6

I resigned — can I access my pension fund?

Accepted Answer

A voluntary resignation (without grounds for severance) means the Section 14 employer contributions in the pension fund remain subject to pension rules — they cannot simply be withdrawn as if they were severance pay. Depending on the agreement and the circumstances, access to the employer's contributions may be restricted until normal pension age. Adv. Elmaliach advises on the specific position in each case.

Pension Rights on Termination in Israel

Pension and Severance — How They Interact

Frequently Asked Questions

Dismissed — Pension Question?