Amendment 190

Amendment 190

Your pension will be one of your main sources of income when you retire, so pension savings are critical. Having recognized this fact, the Ministry of Finance approved Amendment 190 to the Income Tax Ordinance in 2012. The main purpose of the Amendment was to restore the attractiveness of pension savings through provident funds and encourage citizens, especially retirees, to deposit  in provident funds money they have saved over the years, with the advantage of being able to withdraw* their savings at any time**.

The Amendment is, in fact, the most significant financial benefit for the retiree population and for those who are expected to retire in the coming years. It is therefore important that each and everyone of us is aware of the benefits of the Amendment.

Amendment 190 to the Income Tax Ordinance increases the range of tax exemptions on pension annuities. Under the Amendment, we may make a one-time deposit or ongoing contributions to the provident fund, and withdraw the funds as an annuity or a one-time lump sum*** and enjoy tax benefits on withdrawal.

In a time of low inflation, these tax benefits, along with the possibility of making a one-time lump sum withdrawal, makes investing in provident funds highly attractive for many savers, especially the senior citizens among us.


What are the advantages of investing in a provident fund under Amendment 190?

  • You can withdraw your money at any time***** - (if over age 60) as an annuity, without paying tax, or as a lump sum, with reduced tax.
  • Reduced tax - a 15% tax on nominal profits (in lieu of 25% on real profits as is the case with other investment instruments). This is a huge advantage in a low-inflation environment.
  • Management fees are low in relation to other investment classes.
  • Mobility - a variety of investment tracks you can switch between at any given time without creating a tax event.
  • A wide diversification of investments that provides stability - diversification of investments in Israel and abroad, the option of investing in tradable and non-tradable assets such as income-generating properties and infrastructure, domains that are inaccessible to investors through traditional investment classes.
  • Naming beneficiaries - a provident fund allows you to name beneficiaries who will inherit the funds. The funds will be transferred to the beneficiaries on death, without the need to present a succession order or will
  • Leverage - a loan may be obtained under relatively attractive terms (up to 28% of the accrued funds) against the provident fund, with the possibility of investing it back in the provident fund or for any other purpose.


How do you start a provident fund under Amendment 190?

Simply fill out a form to join a provident fund and sign a declaration form:

Form to join a provident fund

Declaration form

Or call *5054. We will be happy to assist you.


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Legal Note:

* By way of capitalization of a recognized annuity ** Subject to compliance with certain conditions *** By way of capitalization of a recognized annuity **** In a low inflation environment ** Subject to compliance with certain conditions