The Employer Did Not Make Pension Contributions: How to Detect the Shortfall and Claim Its Recovery

Check the Fund, Not Just the Payslip

Log in to the personal account area of the pension fund, insurance company, or provident fund, and download the quarterly reports and deposit history for the entire employment period. Compare each month with the corresponding payslip: who is listed as the depositor, what the insured salary is, and what amounts were actually deposited. It is advisable to conduct the check after the 15th day of the following month—the employer may transfer the current payment by that date. Warning signs include a missing month, payment of an amount lower than the amount stated on the payslip, or a deduction from the salary without a deposit into the fund.

First, Determine When the Entitlement Arose

Mandatory pension insurance has applied in Israel since 2008 under the Extension Order for Comprehensive Pension Insurance in the Economy; the entitlement generally applies to men from age 21 and women from age 20. If the employee had an active pension arrangement when starting work, the employer must begin making contributions from the first day of employment and transfer them retroactively after three months. In the absence of a previous active arrangement, the obligation usually arises after six months, meaning from the seventh month of employment. The fund may be considered inactive if no contributions were made to it for more than five months before the new employment began; better terms may apply in certain sectors and under beneficial arrangements.

How to Calculate the Shortfall for Each Month

As of January 2017, the minimum total contribution rate is 18.5% of the insured salary: 6% is deducted as the employee’s share, the employer pays 6.5% as pension contributions, and an additional 6% is transferred to the severance-pay component. For each month, multiply the insured salary by the applicable rate and subtract the amount actually deposited into the fund. The entire gross salary should not automatically be used: the contribution base may depend on the contract, collective agreement, sectoral extension order, or composition of the payments. If there is a beneficial pension arrangement, the calculation must be made according to it when its terms are better than the general minimum.

What Evidence Should Be Collected

Keep the employment contract, the notice regarding employment conditions, all payslips, bank records proving salary payments, and pension reports. Ask the fund to specify in writing the months in which no payments were made, the dates of the actual deposits, and information on whether the insurance coverage was maintained. It is advisable to prepare a monthly table with four columns: the insured salary, the amount that should have been deposited, the amount deposited, and the difference. The Labor Court will not examine only the figures appearing on the payslip, but will also examine the actual deposit of the funds, the date on which the entitlement arose, and the existence of a beneficial arrangement.

Demanding Payment from the Employer and Applying to the Labor Court

Send the employer a written demand enclosing the shortfall table and copies of the reports, and set a deadline for a substantive response; after the correction, check the deposit again in the fund itself. In the event of a late transfer, the employer must take late-payment interest into account in order to restore the original value date and the associated rights. If the matter is not resolved, the employee may use the calculators and dispute-resolution system of the Labor Courts, file a monetary claim, and also report the violation to the unit within the Ministry of Labor. In a published judgment of the National Labor Court, an award of 8,949 shekels was made for pension contributions, together with linkage differentials and interest from the date the employment ended; the available remedies depend on the proven damage. The materials presented do not specify a uniform limitation period for all claims of this type, so the expiration date must be examined for each period in which there was an underpayment, and handling the matter should not be postponed.

FAQ

Sources

• Ministry of Labor: The Right to Pension Insurance
• Kol Zchut: Mandatory Pension Insurance for Employees
• Kav LaOved: The Right to a Pension and the Employer’s Obligations
• National Labor Court: Judgment Concerning Pension Contributions
• Labor Courts’ Calculation and Dispute-Resolution System

Read also

• No Written Employment Terms: Can You Claim Compensation?6 min read
• Paid Cash Without a Payslip: How Can You Prove and Recover Wages?6 min read
• Pay or Shifts Cut: When Does Resigning Count as Dismissal?7 min read
• Quit Without Notice: How Much Can Your Employer Deduct?6 min read