Don’t Kill the Israeli IRA: Let Savers Choose

Imagine a financial product that allows you to take control of your long-term savings, reduce fees, invest according to your values, and build a secure retirement – all within the legal framework of Israel’s pension system. That product exists. It’s called the IRA, or more precisely in Hebrew, the קופת גמל בניהול אישי (Self-Managed Provident Fund).

And now, it’s at risk of being legislated out of existence.

What Is the Israeli IRA – and Why Does It Matter?

The Israeli IRA isn’t some loophole or fringe product. It’s a legitimate, regulated alternative to traditional pension (קרן פנסיה) and keren hishtalmut (קרן השתלמות) funds, built to give financially literate individuals the ability to manage their retirement investments. It allows savers to:

• Build a diversified, global portfolio
• Minimize fees by choosing low-cost index funds

• Adjust risk levels based on personal goals and risk tolerance

• Avoid unnecessary reliance on opaque or inflexible institutional strategies

Sound familiar? It should. These principles are at the heart of responsible long-term investing, and they’re backed by global research and decades of market data.

In the US, self-directed retirement accounts like the IRA and 401(k) are not just common – they’re the foundation of personal retirement planning. So why is Israel moving to restrict them?

The Real Problem Isn’t the IRA – It’s a Lack of Oversight

Recent headlines around the “Slice” scandal – a case of alleged pension fraud involving non-traded, exotic, and potentially fraudulent funds – have triggered understandable concern. But instead of fixing the actual issue (i.e., lack of oversight and proper controls), some lawmakers are now proposing to suppress the entire IRA product under the guise of “protecting savers.”

This is a classic case of throwing out the baby with the bathwater.

Yes, fraud allegedly occurred. But the solution isn’t to ban self-managed investing. The solution is enforcing regulation: limit access to illiquid and opaque investments, ensure better transparency, and enforce existing rules. Don’t punish investors who are doing everything right.

Financial Literacy and Choice Go Hand in Hand

As a financial coach, I spend every day helping people build confidence in their finances – budgeting, saving, and planning for the future. One of the most empowering steps a person can take is learning to manage their own money responsibly. It’s a path to freedom, not just financial but psychological.

The Israeli IRA isn’t for everyone – and it doesn’t need to be. Many if not most savers will still benefit from widely diversified, institutionally managed tracks. But for those who are ready, who want to optimize their retirement using proven, diversified strategies, this product is a powerful tool.

Taking it away doesn’t protect people. It infantilizes them. And worse – it reduces competition, increases reliance on high-fee institutional tracks, and undermines the very principles of investor empowerment that we should be promoting.

What Should Be Done Instead?

The right path forward includes:

✅ Keeping the IRA product available to all savers – not just the wealthy
✅ Enforcing transparency and asset restrictions to prevent fraud
✅ Encouraging financial education and coaching – not gatekeeping
✅ Incentivizing more institutions to offer the product with proper oversight

The Bottom Line: Let Savers Choose

The government’s role is to ensure safety and fairness – not to limit freedom for the sake of convenience. Killing the Israeli IRA would set back financial progress and disempower exactly the people who are trying to take responsibility for their futures.

Let’s not allow a few bad actors to define the future of long-term saving in Israel. Instead, let’s push for a better solution – one that protects savers without punishing them.

Let’s fix the system. Not destroy it.

The public can still submit objections to the proposed regulations.

• Deadline: July 14, 2025 at 23:59
• Link: אתר החקיקה הממשלתי החקיקה הממשלתי
  Let’s fix the system — not destroy it.