NIS 800 billion: The hole in National Insurance | With Gad Lior

The actuarial deficit of Israel's National Insurance Institute is estimated at NIS 800 billion, nearly double the cost of the war. The reserve fund is expected to be depleted by 2035, ten years earlier than planned, due to population aging. Economic commentator Gad Lior explains how the deficit was created and what is expected when the reserves run out.

The actuarial deficit of Israel's National Insurance Institute is estimated at NIS 800 billion, an amount twice the cost of the war. This is a cash-flow deficit, where annual expenses exceed income. The reserve fund, invested in special bonds of the Ministry of Finance, is expected to be depleted by 2035, ten years earlier than originally planned. The main reason for the deficit is the aging of the population, which increases the total benefits. ynet's economic commentator, Gad Lior, explains that the principle of national insurance is mutual guarantee: the working public pays a monthly premium to ensure benefits in cases of impaired earning capacity, such as old age, disability, and unemployment. According to him, millions of Israelis receive benefits, and without national insurance, one or two million more people would be added to the poverty line. Lior clarifies that a complete collapse of the National Insurance Institute will not happen, but the depletion of the fund will leave money to pay only part of the benefits, which could lead to a reduction in the old-age pension, which is already very low. The state will need to make decisions to ensure the continued provision of benefits.