These days, the annual reports for 2022 of the provident funds that manage the "Savings for every child" program are being sent to about 2 million children. After several years of extremely high returns, 2022 arrived with sharp declines in the markets as a result of the threat of inflation, expected interest rate increases, the effects of the war in Ukraine, etc. These sharp declines led to unusual negative returns also in the savings plan for each child, of 11.63% on average.
However, it is important to know that the funds are managed in several investment routes by different entities, and therefore there is a difference in returns as can be seen in the attached table which was built according to Gemel Net data of the Ministry of Finance.
However, before we panic, it is important to note that from the beginning of the fund's operations in early 2017 until the end of 2022, the funds achieved cumulative positive returns of approximately 27% on average.
What does the report contain?
So what exactly does the Provident Fund's report contain and why should you pay attention? We asked Eyal Siani, a member of the Finance Committee at the Chamber of Insurance Agents and VP of Financial Services Quality to understand.
The annual report you will receive these days contains four main parts.
Eyal Siani,
Part I: Movements in the account
This table shows a general summary of financial data in the account during 2022, such as the savings balance, deposits and withdrawals as well as the total profits or losses accumulated in the account during 2022. Not many know, but the funds can be moved from one company to another without limit.
There are very significant differences in the returns generated by the funds, reaching huge gaps.
Part B: Rate of management fees and expenses in 2022
This table shows a breakdown of the management fee rate charged to the account.
In fact, the management fees are zero because the state pays the management fees until the child reaches the age of 21.
Part C: Investment routes and returns in 2022
A table showing the investment route in which the funds were saved and the yield achieved during the reporting period.
Part D: Detail of deposits to the account in 2022
A table that shows the details of the deposits made every month in the account.
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