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Raising the Retirement Benefits Eligibility Age for Women

© Aaron Amat |

Raising the retirement benefits eligibility age for women: ACRI and the Adva Center’s Position

The Ministry of Finance aims to turn working women into "nice guys" by comparing their retirement benefit eligibility age (mistakenly referred to as the "retirement age" – which is 67 for both sexes) to that of men. The actual retirement age indicates the age at which an employee may be fired due to their age. In our opinion, the "retirement age" should be abolished, but that’s a topic for further discussion at a later date. Our current issue entails the retirement benefits eligibility age.

It’s no secret that there’s gender inequality in the labor market. Furthermore, it is unreasonable to try to correct gender inequality only as a woman leaves the labor market. The correction must be made during the work period, especially when the “correction” effectively entails further harm to the many women currently working in, or discharged from, the labor market.

Although the issue has not yet been advanced due to a series of significant disputes, the Ministry of Finance posits that the retirement benefits eligibility age for women must now be raised from 62 to 65. Why 65? Since 2012, the Ministry of Finance has unsuccessfully attempted to raise women’s eligibility age for retirement benefits, due to pressure from women's organizations and Knesset members, along with disagreements among Knesset members. At first, raising women’s retirement benefits eligibility age from 62 to 64 was considered (while finance officials hoped that it would later be possible to raise it to 67, which is the retirement benefits eligibility age for men). Yet now the Ministry of Finance is trying to make up for lost time by advancing its latest attempt within the framework of the Arrangements Law to immediately raise the retirement benefits eligibility age to 65.

In recent years, there has been much discussion on the anticipated harm that may be caused to many women as their retirement age increases. There must be genuine tools or solutions offered to women who will be harmed by the process. Currently, the Ministry of Finance seeks to raise the age without offering such tools.

It is our position that the original outline for raising women’s retirement benefits eligibility age should be adhered to – that is, shifting the age to 64, whereupon the increase will be carried out gradually over the course of 10 years.

Additionally, we oppose automatic updating mechanisms beyond the age of 64, such as the Ministry of Finance’s proposal to link the eligibility age to a formula based on the increase in life expectancy. In light of the implications of raising the age and the potential harm to some of the female population, a professional and public discussion must be held along with an examination of consequences for the labor market prior to raising the age of eligibility any further.

The entire plan must be removed from the Arrangements Law, and a professional, in-depth discussion must be conducted separately and along with all relevant parties.

Why did (and do) women's organizations and Knesset members oppose raising women’s retirement benefits eligibility age? After all, a longer period of employment entails higher retirement and employment pensions. The reality is that, among women aged 50 and over, some women are no longer in the labor market and their chances of reintegrating into the market are very slim. The annual number of such women was estimated to be approximately 3,300 prior to the coronavirus pandemic, and, following the pandemic, is expected to rise due to the labor market crisis. That is, there are tens of thousands of women who have dropped out of the labor market and are not expected to reintegrate. If the eligibility age is raised, such women will have to wait an additional three years, according to the Ministry of Finance’s current proposal, until they may receive a retirement pension.

Moreover, women who lack rewarding employment skills may only be able to earn a living if they receive retirement pension in addition to their low salary.

If the retirement benefit eligibility age is raised, compensation must be granted to these two groups of women.

Such compensation is suggested in the Ministry for Social Equality’s outline, formulated in cooperation with women's organizations among civil society.

What are the main points of compensation in the Ministry for Social Equality’s outline? The compensation mechanisms refer to two main groups: first—older women who are directly and immediately impacted by the increase in the retirement eligibility age, and the second—working women, who have worked in an unequal labor market throughout their employment and are thus discriminated against upon leaving.

Regarding older women impacted by raising the eligibility age, the proposal detailed in the outline is as follows:

1) Women aged 50 and over, who have already left the labor market and whose chances of re-entering it are slim, will be offered a temporary coronavirus stipend to compensate for old-age benefits that will be lost, should the eligibility age be raised.

2) For women who require both the meager salary they receive and the retirement pension, an increased work grant is offered with better conditions – through reducing the initial monthly salary threshold for receiving the grant from NIS 2,060 to NIS 1,250.

3) For women aged 57 and over who were pushed out of the labor market prior to, or during, the coronavirus, the right to unemployment benefits will be extended to last over 250 days in the initial year of raising the entitlement age for retirement pension, and up to 342 days in the tenth year.

4) Amendment of the "disregard" mechanism, according to which senior citizens’ retirement pension – for both women and men – is offset for those who are still working.

Regarding gender inequality in the labor market, which impacts women even following their retirement, our position aligns with that of the Ministry for Social Equality, in encouraging promotion of structural correction in the labor market and reduction of gender gaps, through use of the following tools among others:

a) Provision of state pension savings during periods of extended parental leave, for up to six months, such that women won’t lose pension funds that may significantly increase their employment pension following retirement;

b) Granting a four-week parental leave and full compensation to both the spouse giving birth and their partner (in a “use-or-lose” format), to deepen spouses’ involvement in childcare, thus enabling a more balanced distribution of such care work;

c) Expanded investment in early childhood care settings (0-3), including significant expansion of structures, training, and improvement of caregivers’ compensation and employment conditions.

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