Keren Hishtalmut
Roughly translated, a keren hishtalmut is an advanced study fund. This is in actuality a savings plan. In the past it used to be a dedicated savings plan, meaning that the funds could only be used for enhanced studies. Today, it can be used for any purpose.
In recent years, the monetary market has undergone revisions and changes, and at present keren hishtalmut is the only medium length savings plan, that the earned interest is still tax exempt (provided of course that the deposits are within the ceiling published by the Tax Authority)
What are the % of contributions towards keren hishtalmut ?
For salaried employees, The employee’s contribution is deducted directly from the gross pay via the paylsip.
Employee contributions are usually 2.5% and employer’s contributions are 7.5%.
For self-employed, the contribution is 7% (up to 17,040 sh annually)
How much can I deposit into a keren hishtalmut ?
The annual ceiling from which contributions can be made is currently 188,544 sh (or 15,712 sh per month). Contributions from higher amounts result in taxation on the portion over the ceiling.
How long is the keren hishtalmut plan ?
Keren Hishtalmut savings plans are a six-year plan. The accumulated sums in the fund can be used after 4 years tenure towards advanced studies. They cannot be used towards a university degree, but rather on enhancement courses, regardless of the subject.
At the end of 6 years tenure, all the accumulated sums can be withdrawn and be used for any purpose, However they do not have to be withdrawn and remain available for immediate withdrawl upon request, while at the same time continue to gain interest.
Since this type of savings plan is very attractive, it would be wise not to withdraw the money after 6 years, if you do not need to.
Is keren hishtalmut mandatory ?
No, it is not. The labor laws do not mention it at all.
In the public sector (Government, Municipalities, etc) it is mandatory due to existing work agreements and custom procedure in the place of employment.
In the private sector, it is a nice perk that you may be able to get instead of a higher salary via contract negotiations.
Some places of employment will give keren hishtalmut after certain tenure has been reached.
