According to Employment Service data, following an iron sword war, tens of thousands of workers have been laid off and/or placed on unpaid leave, and the trend is expected to worsen in the near future.
By law, when an employee is on unpaid leave, the employer is not obligated to deposit pension savings for him.
One of the burning issues for an employee who has been placed on unpaid leave or fired, especially during this period, is whether and how to preserve the insurance rights in the pension fund and what needs to be done to make this happen?
We were assisted by Eyal Siani, a senior industry official and member of the Finance Committee of the Association of Insurance Agents, in order to understand what and how to do it.
Eyal Siani,
Insurance coverage in the pension fund. A new pension fund includes 2 very important insurance coverages:
Death – Upon the death of the fellow, the pension fund will pay survivors' pension (as defined in the fund's regulations). As a rule, the pension will be paid to the spouse until the end of their life and to the children – up to the age of 21.
Disability – If the colleague has lost his ability to work, the pension fund will pay him a disability pension. It should be emphasized that in addition to the monthly pension, the pension fund will continue to deposit into the colleague's account the monthly deposits that he would have made had he not lost his ability to work.
The cost of insurance coverage in case of death and disability of the colleague is collected from his and his employer's ongoing contributions to the pension fund.
If so, the question arises – what will a colleague do when as a result of dismissal or unpaid leave, his contributions to the pension fund have stopped? Will the colleague lose their insurance coverage?
Pension // Lost funds and management fees. This is what your pension fund looks like,
The first solution is to continue to independently deposit the deposit amounts as they were prior to unpaid leave/dismissal. Since this solution is apparently irrelevant for the most part due to financial limitations, it is important to know that the pension fund provides an ultimate solution that allows the employee to continue to maintain the insurance coverage in the pension fund without having to deposit the full amounts of the deposits as they were before he was placed on unpaid leave/dismissal.
How? The answer lies in the common expression in popular parlance: "temporary crash."
Temporary crash
When deposits in respect of a colleague in the pension fund are stopped, a mechanism is activated under which the pension fund continues to maintain the colleague's insurance coverage as it was prior to the cessation of payments, for a period of 5 months from the date of the last deposit. It is important to know that this mechanism is activated automatically and there is no need for active action on the part of the peer.
So far, everything is great, but what will a colleague do who has not yet returned to work after 5 months? There is a solution! If the colleague wishes to continue maintaining the insurance coverage, he can do so by proactively contacting the pension fund before the end of the aforementioned 5 months, in order to operate a mechanism called an "insurance arrangement". In this framework, he may request to extend the maintenance of insurance coverage for an additional period of up to 19 months.
In this way, he will be able to maintain his insurance coverage in the pension fund for an aggregate period of up to 24 months.
The cost of insurance coverage during this period will be the same cost paid during the period of deposits to the pension fund and will be paid out of the accumulated savings in the pension fund.
It should be noted that managers' insurance also has a similar mechanism to the pension fund (except for managers' insurance until April 2007, where automatic maintenance of insurance coverage will be for a period of 3 months, with the possibility of an extension initiated for an additional period of 9 months).
The bottom line - it is recommended that an employee who has been placed on unpaid leave / dismissed and wishes to maintain his insurance coverage, contact the pension fund and / or insurance agent immediately upon cessation of deposits and act accordingly in order to maintain the insurance coverages that protect him and his family.
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