Finance Minister Bezalel Smotrich has dismissed reports that Israel is seeking to gradually raise the retirement age to 70 as part of a multi-year economic plan.
Smotrich bashed the reports in the Hebrew press as “false” in a social media post on X.
“Journalists have not contacted me on the subject to enquire and receive clarifications,” Smotrich protested in his Wednesday statement. “So at least the public should know my position: The retirement age will not be raised to 70. The issue is not on the agenda.”
Smotrich’s comments came after reports said senior officials in the Finance Ministry had begun formulating a broad multi-year economic plan for 2027–2032, including sweeping economic reforms aimed at lowering the budget deficit. Among the measures under discussion were the cancellation of certain tax and VAT exemptions and the gradual raising of the retirement age to 70, the reports said.
The retirement age for men in Israel is 67, and the retirement age for women varies from 62 to 65, depending on their year of birth. The mandatory retirement age is 67 for both sexes.
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Although the Finance Ministry is not actively advancing measures to raise the retirement age to 70, officials noted that it remains part of a long-term economic contingency plan prepared and ready for use when needed.
Illustrative: Workers are seen at a construction site in Katzrin’s 12th district, where 1,800 new housing units are being built, a project expected to double the city’s population, in Katzrin, Golan Heights, January 6, 2025 (Michael Giladi/Flash90)
Pension fund review
As part of the multi-year plan, the Finance Ministry is also considering reducing pension contributions. Currently, employee and employer pension contributions, along with taxes and other deductions, can reach 30% of an Israeli worker’s salary.
“Among other things, we are conducting an in-depth review of pension and provident fund contributions, along with important wage-related initiatives,” a senior Finance Ministry official told Israeli daily Ynet.
“The goal in these areas is not to enrich the state’s coffers,” the official claimed, “but to increase citizens’ disposable income and improve their welfare, while distributing the tax burden in a more balanced and appropriate way.”
Unequal impact
Senior industry figures praised the very fact of preparing a multi-year government plan after years without one.
The proposal to raise the retirement age is not new. It is being justified by the rise in life expectancy, which in turn means people can work for more years today than they used to.
Israel is ranked fourth in life expectancy both among the countries belonging to the Organization for Economic Co-operation and Development (OECD) and all countries around the world, according to the OECD’s latest report. Life expectancy in Israel between 2022 and 2023 rose among both women (from 84.8 to 85.7 years) and men (from 80.7 to 81.7 years).
The main issue with raising the retirement age is that it doesn’t affect everyone equally. Those in physically demanding jobs like cleaning, construction, driving, or shift work bear the brunt of the impact of hiking the retirement age. People’s ability to work in physically strenuous roles typically decreases with age, and the opportunities for retraining at an older age are limited.
Conversely, those in less physically demanding roles — like high-tech workers, doctors, consultants, managers, or lecturers — can sometimes continue their careers well past the age of 70.
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