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pension reform possibly costly to banks
June 11, 2003
Israel - The
“Yediot Ahronot” Hebrew daily reports that the pension reform is
liable to prove costly to the banks, due to their streamlining programs in
recent years, which included allowances for the early retirement of
hundreds of employees. The reform could cost some of the banks hundreds of
millions of shekels in added costs. Other major employers are also liable
to incur these costs.
The Benefit pension consultancy
estimates that the pension reform will cost employers an average of NIS
100,000 for each employee receiving early retirement.
Under early retirement, the
employer pays the retiring worker the allowance he gets upon retirement.
When the employee reaches retirement age, the pension fund takes over the
payments. Following the raising of the retirement age, employers will have
to pay workers retiring before retirement age for longer periods, until
they reach pension age.
Benefit also stresses that
employers will not be affected in every case of early retirement. Where
the banks are concerned, however, it is feared that they will have to make
additional payments in most early retirement cases.
The banks said
in response that they were considering the matter.