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Pensions Part Seven: How to Choose a Pension Fund

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legal warning

legal warning: I am not a certified accountant, nor financial adviser. The information here should not be understood legally as financial advice. If you believe anything on this site is in error, please contact me. I am always open to corrections, new ideas, and new opinions... I am a certified insurance agent and am in the process of converting my licenses to one of a certified objective pension consultant.
Jonathan Degani is a licensed insurance agent introducing and selling pension and financial products as opposed to being a pension or financial adviser.  Jonathan Degani is a non-tied agent that predominantly markets pension products of the following companies: Life Insurance – Clal, Harel, Menora, Migdal, Phoenix Pension Funds – Clal Pensia, Harel Pensia-Harel Gilad Pensia, Meitav-Dash Pensia, Menora Mivtachim Pensia, Migdal Makefet, Phoenix Pensia Financial Products – Clal Pensia, Harel Pensia-Harel Gilad Pensia, Meitav-Dash Pensia, Menora Mivtachim Pensia, Migdal Makefet, Phoenix Pensia

You’re almost there.  You already know what you’re paying into the system and when you’ll begin paying.  You know the different products on the market and how the different products approach risk.  You know how to compare returns from the various funds and understand the various fee structures.  You even know the kind of insurance involved and how to decide what is right for you.  Now we’re going to put it all together and help you choose the right pension for you.

The first step to choosing a pension is to determine what you need.  For 95% of workers, this is going to be a keren pensia mekifa but there are exceptions – namely those who make more than twice the average wage and need to pay into an additional fund, and some with insurance complications may need bituach menahalim.  Once you know what kind of fund you want, the next step is to choose the investment strategy and possible funds.  Again, for most people, this means going to pensianet, and choosing the best three to five funds based on well they did for their three year and five year average return as well as their sharpe.  If you also want to choose a non-general fund (a Chilean or ikea fund) that is okay, but keep add three general funds to your list of possibilities.

The next thing you do is contact either your insurance agent or the companies directly and see how good a deal you can get on fees (go to http://ozar.mof.gov.il/hon/bituah/address.htm to see a list of all the companies and their phone numbers).  Each time a person tells you a number take down his name and contact information; you may need to call him back.  As you call each provider, try to bargain him or her down on the charges.  Pit one against the other and call back a provider and tell him that company X will only charge you Y and ask if his company can beat it.  After a while, you’ll find that one company has offered you less in for deposits (hafkadot) and one will offer you less for accumulation (neches).  Compare the fees and the funds and choose whichever option suits you best.

The next thing you’re going to need to do is set up your insurance within the pension.  Make sure you choose the correct insurance option so that you’re not throwing out your money, nor under-insured in case of a catastrophe.  You will most likely need to buy additional seudi (long term disability) insurance to complement this insurance (I will have an entire post explaining seudi coming soon).

If you already have a pension, make sure when opening a pension that you are continuing the one you already have (ask for shmirah al haretzefI).  This will ensure that you don’t have another 5 year period of excluding preexisting conditions on your insurance.  You should also ask for the appropriate paperwork in order to move all your money from your old pension to your new one.

I know the process can be intimidating, but we’re talking about the biggest investment of your life.  A few days of work now will save you hundreds of thousands of shekels in the future.

If you have any questions or are looking for help choosing a pension, please call me at 054-316-3211 or e-mail me at jonnydegani@gmail.com.  I either work with or am in the process of signing up with Menorah-Mivtachim, Clal, Harel, Midgal, Meitav-Dash, Psagot and Phoenix, who collectively make up 98% of the pension market.  I also have some connections to people in the smaller companies as well if you prefer them.  I would be happy to help you choose and set up a pension absolutely free.

The guide to your pension in Israel (keren pensia and bituach menahalim)

Part One: Paying into your Pension – Part Two: The Five Types of Pension Plans – Part Three: How your Money is Invested – Part Four: Risk and Returns – Part Five: Understanding and Avoiding Fees – Part Six: The Insurance in your Pension – Part Seven: How to Choose a Pension Fund

1 Comment

  1. sue says:

    wow what a very extensive, super explanatory article. I am in the midst of trying to decide a pension from work and feeling the pressure from HR and guilt feelings of keeping 2 insurance agents hanging on the phone….call it European but I have a hard time keeping everyone on the hold while i try to figure out what this is all about and just HOW IMPORTANT it is…..
    so thanks so much for this!

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