The Capital Market Authority published a draft circular yesterday, in which it proposes to change the default course from low to high risk.
Let's recall that today, in cases where the parents did not choose an investment route at all, the default is a low-risk route.
In the explanatory notes to the circular, the Capital Markets, Insurance and Savings Authority states that according to the headquarters work that was done, the investment in the route with increased risk for a period of 18 years is expected to yield a higher return.
In addition to this, the Authority found that parents who belong to the highest deciles choose a route for their children, and the choice is mainly in high-risk routes.
Contrary to this - parents in the five lowest deciles do not choose an investment route, so the default is a low-risk route.
This creates a fixation of a gap in savings between the children of the deciles.
The authority says that the proposed amendment constitutes an implementation of the conclusions of a joint committee for the Treasury, the National Insurance and the Capital Market Authority, and that it allows for an increase in the duration of the accumulated savings amounts in the savings plan for each child.
This, with the aim of increasing equal opportunities in the transition to adult life and social mobility in Israel.
make it easier for parents
It was also proposed in the draft circular that during the merger procedure, while choosing the governing body of the provident fund, the parents could choose whether they wish to transfer their mobile phone number and email to the governing body - something that will facilitate regular updates and keeping in touch with the parents regarding the children's savings.
Today, the managing companies do not have the parents' contact information, except for an address, and this creates difficulty in establishing contact with the parents if necessary.
Of course, the company will be prohibited from making marketing use of the contact information.
From the latest National Insurance data published on the subject, it becomes clear that in 2021 savings plans were opened for 177,603 children.
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