Pension Privatisation: Benefits and Costs

Pension Privatisation: Benefits and Costs Abstract During the last 10 years, many OECD countries introduced reforms which included automatic enrolment or mandatory participation in privately managed pension schemes. The current article aims to reveal the benefits and costs of privately managed pension schemes. The article uses a study of pension schemes’ bylaws in Israel to study the degree to which the shift to privately operated DC schemes results in the transfer of risk from capital to labour and in the entrenchment of gender and income inequalities. The article shows that the shift of pension provision from defined benefit (DB) to defined contribution (DC) entails a significant shift of risk from capital to labour. Moreover, separately from the DB to DC shift, moving from public management to private management increases employees’ pension risks. Lastly, the paper shows that the combination of the shifts from DB to DC and from public to private management involves a shift in governance, which exposes pension scheme members to a high likelihood of lower returns as well as to gender and income inequalities. 1.  INTRODUCTION In October 2012, the UK government introduced a policy of automatic enrolment into workplace private pension schemes. Once the move is completed, in February 2018, all UK employers will have a duty to enrol all qualifying workers into a qualifying pension scheme.1 This pension reform will lead to a sharp expansion of UK employees who are members of privately managed pension schemes.2 This act of the UK government might seem, at first sight, to be a social-democratic effort to expand employees’ pension rights and to strengthen labour. Nonetheless, the act can also be seen as part of a long process of pension privatisation in the UK. During the last 10 years, many OECD countries introduced reforms which included automatic enrolment or mandatory participation in privately managed pension schemes. This paper aims to reveal the benefits and costs of mandatory privately managed pension schemes. The paper uses a study of pension schemes’ bylaws in Israel to study the degree to which the shift to private operated DC schemes results in the transfer of risk from capital to labour and in the entrenchment of gender and income inequalities. The second part of this paper (after the introduction) will show that current pension reforms in the UK as well as in other OECD countries are part of a large global process of privatisation of pension schemes. The third part of the paper will review current discussion regarding pension privatisation. The fourth part will examine the case study of Israel. Israel adopted the World Bank recommendation with regard to pension privatisation at a relatively early stage and therefore serves as an interesting case study for evaluating the costs and benefits of pension privatisation. The fifth part will present the methodology. The study will use new empirical data from Israel including pension funds’ bylaws, financial reports of the funds and Central Bureau of Statistics data. The sixth part will present the findings. The paper will show that the shift of pension provision from DB to DC entails a significant shift of risk from capital to labour. Moreover, the paper shows that separately from the DB to DC shift, moving from public management to private management entails high risks on employees. Lastly, the combination of the shifts from DB to DC and from public to private management exposes pension scheme members to a high likelihood of lower returns as well as to gender and income inequalities. The seventh part will discuss the implications that the case study of Israel has in store for the current debate on privatisation. The last part will conclude. 2.  PENSION PRIVATISATION: DEFINING THE TERMS A.  Three Pillars Pension systems in OECD countries are comprised of three pillars.3 The first pillar is, at least partly, a publicly managed pension pillar and includes social security benefits. Its purpose is to provide the residents of the country (or the citizens or the employees depending on the system) an adequate standard of living.4 In the UK, the value of the first pillar (the new state pension introduced in April 2016) is 22% of the average wage.5 The first pillar was (and still is in many countries) structured as as a ‘Pay as you Go’ scheme.6 The second pillar is occupational pension. Its purpose is to provide the retiree with a standard of living that is as close as possible to the standard of living she was used to before retirement. The second pillar can be voluntary or mandatory, privately or publicly managed. In the UK, as noted above, the government introduced in 2012 an automatic enrolment reform.7 The third pillar is private savings. The current paper focuses on the second pillar and its privatisation. Nonetheless, all three pillars of the pension systems are connected to each other. If, for instance, the first pillar provides a high adequate public pension to a country’s residents, there is less need of a decent second pillar. The opposite is true as well. If the first pillar is very low, residents must rely on both pillars. Therefore, although this paper focuses on the privatisation of the second pillar of the pension system, it will touch a bit also on the first pillar. B.  Pension Privatisation For the purpose of this current paper, the term ‘pension privatisation’ is defined as the process of shifting the control, management and finance of pensions from the public sphere to the private sphere. The process of pension privatisation occurs in different ways in different countries and at different times.8 Every country has it unique pension system with its unique combination of public and private involvement.9 For example, in the UK, prior to the new State Pension (of April 2016) employees have been able to choose to ‘contract out’ of part of the additional element of the State Pension and join an occupational or personal pension arrangement instead.10 The adoption of the new State Pension led to the abolition of the option of contracting out.11 Each unique system is connected to the particular country’s welfare regime, industrial relations system and economic situation. A pension privatisation reform which can occur in one country might not necessarily occur in another country.12 Moreover, pension reforms that occurred in one period of time might not necessarily occur in another period. The privatisation of pensions in many countries is a long process which includes many small reforms. Each reform enabled the next reform.13 Moreover, in several countries, a reverse trend can be identified, where countries have taken back the control, management and finance of their pension systems (eg, Argentina, Hungary Slovakia, Estonia, Latvia and Poland).14 Pension privatisation can, therefore, be seen as a spectrum where countries differ from each other by the amount of privatisation. While pension privatisation can take many forms, several primary forms of privatisation can be identified. In fact, all of the forms described below are connected to each other. All of them are part of the World Bank recommendations from 1994. In 1994, the Word Bank published an influential report entitled ‘Averting the Old Age Crisis’.15 In it, the World Bank recommended that countries adopt a mandatory multi-pillar pension system with a mandatory private pillar. Namely, employers and employees would have to provide monthly contributions to privately managed DC pension schemes. While the World Bank recommendations were not called ‘pension privatisation’, they, in fact, led to a shift in the control, management and finance of pensions from the public sphere to the private sphere. The first characteristic of the World Bank model is its embrace of privately managed schemes. The model includes, therefore, a shift from publicly managed to privately managed schemes. The shift from publicly to privately managed schemes has several variations in different countries and at different times. It includes one or more of the following processes: (a) privatisation of all or part of the first pillar of the pension system, or in other words, involvement (on different levels) of privately managed funds in the first pillar of the pension system (Chile is the classic example of a country that has replaced its entire public pension system (first pillar) with privately managed pensions);16 (b) privatisation of the public service pension scheme in a country; and (c) a shift from employee union management of pension funds to private management. All of these processes lead (in different ways) to pension systems which are largely managed by private entities. The second characteristic of the World Bank model is its embrace of defined contribution (DC) schemes. The model includes, therefore, a shift from defined benefit schemes to defined contribution schemes. During the last decades, many countries (and employers) have shut down defined benefit (DB) pension schemes in favour of new DC schemes.17 Theoretically, there is no connection between the shift from DB to DC and pension privatisation. Both types of pension schemes, DB and DC, could be either publicly or privately managed. In the UK system, for example, several DB schemes are managed by the state and others are managed by private entities.18 In Sweden, as a small part of the first pillar, employees can choose between investing in a publicly or privately managed DC system (the ‘premium pension’).19 Publicly managed DC funds exist also in Italy, Latvia and Poland.20 Nonetheless, notwithstanding the examples above, the shift from public management to private management often comes hand in hand with the shift from DB to DC. Moreover, in several cases, the shift from DB to DC enabled the shift from public management to private management. In fact, the recommendation of the World Bank in 1994 was for states to have a mandated second pillar with privately managed DC pension schemes. In a DB scheme, the terms of the scheme set out the pension to which the employee is entitled, using a formula which generally refers to the employee’s length of service and salary level. In a DC scheme, the degree and nature of the employees’ contributions is set out, but the level of the financial pension is not guaranteed.21 The effect is that in a DB scheme, any shortfall resulting from poor investment performance is met by the employer, while in a DC scheme, it falls on the employee.22 In most OECD countries (including the UK), there is a growing share of active members in privately managed DC pension plans, and a decreasing number of members in privately managed DB pension plans. In the UK, active membership of private-sector DC schemes, which had remained at around 1 million since 2006, rose to 3.2 million in 2014. Active membership in private-sector DB schemes remained at 1.6 million in 2014. Active membership in open private-sector DB schemes fell to 0.6 million in 2014 from 1.4 million in 2006.23 There are several reasons for the shift from DB to DC, among them the sharp rise in life expectancy Due to the sharp rise in life expectancy, besides other causes, many DB plans have encountered an actuarial deficit. Some have declared bankruptcy. Nonetheless, the shift from DB to DC poses several risks (see discussion below).24 The third characteristic of the model is the reduction of fiscal subsidies. Several countries aim to reduce public spending in the second pillar and therefore to reduce the subsidies, tax deductions and credits they used to provide to savers. Instead, more pension savings are invested in the capital market. The reduction of public spending shifts the risk from the state to the savers. The fourth characteristic of the World Bank model is that all countries should have a mandatory second pillar of privately managed pensions. In light of the World Bank recommendations, most OECD countries have passed reforms to broaden the coverage of private pensions. These reforms have included mandatory pension savings (eg, Australia, Chile, Estonia, Finland, Iceland, Israel, Sweden and Switzerland) and automatic enrolment (eg, the UK, New Zealand and Italy).25 These reforms seem to be, at first sight, part of a social-democratic trend of expanding employees’ right to a decent pension. Nonetheless, they are, in fact, part of the process of pension privatisation.26 These reforms enable countries to reduce public spending on pensions. They enable countries to reduce the first pillar of the pension system today or in the future. Moreover, they enable countries to reduce the ‘zero’ pillar (the pillar that is based on income tests). In that sense, these reforms are most problematic to low-wage workers who will find the contribution to a pension system difficult, and who will lose the public pension they would have received otherwise.27 3.  THE QUESTION OF PENSION PRIVATISATION International financial institutions (such as the World Bank and the International Monetary Fund) played an important role in the diffusion of pension privatisation from country to country.28 Mitchell A. Orenstein provided an in-depth look at the activities of a core group of pension reform advocates (including World Bank and USAID representatives) who have operated globally and advised top political leaders in dozens of countries around the world.29 Transnational actors used economic incentives and new knowledge and ideas to convince policymakers to conduct private pension reforms. Moreover, increased cross-border capital flows have also led to changing approaches to pension fund regulation.30 Nonetheless, in parallel to the expansion of pension privatisation, policymakers and scholars have engaged in a wide-ranging debate regarding the benefits and costs of pension privatisation.31 The debate, in large, concerns the shift towards a mandatory privately managed pension with DC schemes, where the money is invested in the capital market. Nonetheless, some of the debate lays emphasis on specific parts of the privatisation (eg, only the shift towards private management of the funds or only on the shift from DB to DC). Supporters of privatisation point to the advantages of freedom, transparency and private management. Private management is supposedly more efficient and more flexible than public management. Private managers specialise in the capital market and should, therefore, achieve higher returns on their investments than public managers. Moreover, private pensions would reduce state expenses on pension management and enable the state to reduce taxes or to allocate money to other essential goals. Furthermore, investment of private pension money in capital markets may increase economic growth.32 Lastly, pension privatisation, which allows individuals to choose among options, improves social wellbeing and individual autonomy.33 Opponents of pension privatisation, on the other hand, highlight the significant risks of privately managed DC pension plans. According to opponents of privatisation, while public pension plans impose risks on the state, privately managed DC pension plans impose risks and costs on the savers (that is, the employees).34 The risks that are imposed on the savers include: (1) investment risk—the risk of unpredictable fluctuations in asset returns from year to year; (2) individual mortality risk—the possibility that individual workers may die very young or live until they are very old; (3) cohort mortality risk—the life expectancy of an entire cohort of workers may change in unanticipated ways; (4) salary risk—workers do not know how much they are going to earn later on in their lives and (5) job tenure risk—the risk that employees’ actual tenure in jobs may be longer or shorter than anticipated.35 DC plans shift all of the above risks to employees. While all employees are at risk in the new DC regime, women and workers with atypical careers are at greater risk than men.36 Women, who on average earn less than men and work fewer years than men, are more exposed to ‘salary risks’ and ‘job tenure risk’, resulting in lower pension benefits.37 Moreover, DC plans may transfer risk back to the state when they fail to pay out.38 In cases of bad DC programs, the state will often pay means-tested public pension benefits to the retirees. Moreover, according to the literature, privately managed DC pension funds increase inequality between employees.39 Managers of a private pension fund might attempt to utilise its profit by providing better services, benefits and fees to ‘profitable customers’, such as employees who work in large or unionised workplaces. As a result, the weakest employees might pay higher management fees and receive lower benefits. Opponents of pension privatisation (which is often associated with individual decision making) also point to the high costs of decision making in a context of asymmetric information. Both the pension fund and the insured suffer from disinformation. The pension fund does not have full information with regard to the condition of the employee’s health and therefore cannot make a good estimation with regard to her life expectancy. The pension funds are concerned about the possibility of a market failure called ‘adverse selection’: insuring only the non-profitable employees (those who will live long and receive benefits for many years, or alternatively those who will become disabled at a very early stage and be eligible for disability benefits).40 Not only do pension funds lack knowledge regarding their members (or potential members). The insured themselves often do not know much about their pension funds or pension rights.41 In the UK, for example, a survey found that 6 in 10 did not know that delaying taking their state pension could increase it by as much as 10%.42 There are several reasons for this lack of knowledge. First, pension plans are complicated. People lack (or think they lack) the economic and mathematical tools that may be needed to properly understand the plans.43 Second, people suffer from myopia and are unable to imagine who they will be 35 years in the future.44 They cannot imagine what that person will want or need. Third, people sometimes suffer from an optimism bias and tend to believe they will need less money in retirement than proves to be the case. Alternatively, some people suffer from a pessimism bias, which results in over-saving.45 Fourth, people associate pensions with sickness and death and therefore try to avoid thinking about them. These behavioural failures prevent employees from overseeing their pension funds and switching to better ones. Due to their lack of knowledge, people often do not compare their pension plan to other pension plans and do not switch between pension plans. Therefore, managers of pension funds do not have a strong incentive to offer low prices (low management fees), provide good service or make good investments. States make certain efforts to provide knowledge to their citizens with regard to their pension plans.46 Nonetheless, these efforts are limited. Opponents of privately managed pension funds point also to the high agency costs of privately managed pensions.47 One type of agency cost is the cost of providing strict regulation. Another is the higher administrative costs, once a certain service is provided by a private entity. Several countries that have mandatory private pensions have capped the management fees that pension funds may charge.48 Restrictions on management fees are important to ensure that members in pension funds will receive an adequate pension. Nonetheless, there is evidence that charge ceilings can also become de facto floors.49 Moreover, a low ceiling might prevent new pension funds from entering the market, thereby restricting competition in the pension market. 4.  PRIVATE PENSIONS IN ISRAEL Israel’s regulators adopted the World Bank recommendations from 1994 at a relatively early stage, and therefore, the case study of Israel makes possible an evaluation of the recommendations from a 20-year perspective. In 1995 Israel closed all DB pension funds to new employees. Since 2008, joining a privately managed DC pension fund has been mandatory in Israel. Currently, the Israeli pension system consists of three pillars: a first universal public pillar, a second occupational pension pillar, and a third pillar of private savings.50 In terms of the first pillar, all residents of Israel are entitled to a basic public pension (unrelated to work status) from the National Insurance Institute.51 The sum of the benefits—equivalent to approximately $380 a month—is low compared to OECD countries and not enough by itself to provide an adequate income after retirement.52 Therefore, the second pillar plays an important role in providing income security for Israeli retirees. The second pillar of Israel’s pension system includes several types of pension arrangements, including DB pension plans (which are now closed to new members) and DC pension plans.53 The case study of Israel, therefore, makes possible a comparison between DB plans and DC plans (only DC plans are open to new members in Israel). Moreover, the second pillar of Israel’s pension system includes DB plans that are managed by the state and DC and DB plans that are managed by private insurance companies. The case study of Israel, therefore, makes possible a comparison between DB pension arrangements that are managed by the state and DB pension funds that are managed through private entities. Lastly, Israel’s pension system serves as an interesting case study because the occupational pension is mandatory. 5.  METHODOLOGY The current empirical research consists of a study of all Israeli pension funds’ bylaws—38 bylaws in total. Eight of these are bylaws of DB pension funds managed by the state, and the rest (30) are bylaws of pension funds managed by private non-state entities (such as insurance companies and investment firms). The research also includes the provisions of the Civil Service Law (Pensions) of 1959, which regulates the Israeli civil service budgetary pension (a huge DB plan managed by the state). Of the 30 bylaws managed by these private pension funds, 10 pertain to DB pension funds managed by private entities and the rest (20) to DC pension funds managed by private entities.54 This research focuses on the main clusters of provisions in the bylaws and in the Civil Service Law. The first cluster is composed of provisions regarding the calculation of pension rights. These provisions define the calculation methods of pension rights in each pension fund. The second cluster is composed of provisions regarding management fees. These provisions determine the management fee ceiling. The third cluster is composed of provisions regarding the terms of eligibility for insurance. These provisions define who is eligible to join a pension fund and who is not. The research also includes financial reports of the funds (which include data on the actual management fees the funds exact from savers), ministerial data regarding returns to investments and Central Bureau of Statistics data. 6.  FINDINGS A.  DC Schemes Entail High Risks to Savers The study of bylaws in Israel shows that, indeed, DC schemes entail much higher risks to savers than DB schemes. In most DB schemes, each year participants acquire 2% of earnings as pension rights. A worker with a 35-year history would receive 70% of her last salary or of her average wage (depending on the specific scheme). In DC schemes, the bylaws define only the monthly contributions to the funds. Savers, therefore, do not (and cannot) know the sum they will receive from the fund. The sum of the annuity in DC schemes in Israel is determined by several factors (according to the bylaws). First, the sum of the annuity depends on the sum of the savings (the sum of all monthly contributions to the fund over the years). In order to receive a decent pension, employees need to work for many years and earn a decent salary. Second, the fund exacts management fees which are deducted from the savings. The higher the management fees, the lower the pension will be. Third, savings are invested in the capital market. The annuity depends, therefore, on capital market returns. Fourth, once an employee retires from work, the fund divides all savings by the number of months which she is expected to live and receive benefits (conversion factor). Funds change their bylaws (and the conversion factors) frequently based on changes in life expectancy. None of the factors described above is under the employee’s control. First, the employee cannot control (by herself) the number of years she will work or the salaries she will receive. Even if a worker plans to contribute large sums of money to pension savings during her working years, she might become unemployed or disabled. Second, savers can’t fully control the management fees they pay to the fund (especially savers without negotiating power). Third, savers obviously cannot control the capital market and its returns. Fourth, savers cannot control the average life expectancy of people in their country. Empirical data from Israel highlight the many risks which DC schemes shift onto employees: (i)  Risks Regarding Labour Market Transitions Labour market transitions include unemployment and taking care of family members.55 Workers in Israel (as elsewhere) face unemployment periods and periods when they take care of family members. Israeli employees are, generally, not covered by DC schemes during these periods (the period of maternity leave is an exception). The longer these periods are the smaller the employee’s pension will be.56 (ii)  Risks Regarding Management Fees DC pension funds reveal in their financial reports the huge differences between the management fees they collect from members who work in large workplaces and the management fees they collect from other members. While the ‘strongest’ employees pay minimal management fees, which are close to zero, the ‘weakest’ employees pay the maximum fees. In the financial reports, the funds disclose that they provide special discounts for employees who work in large workplaces and who consequently pay much lower fees than unorganised workers who work in small workplaces (Tables 1 and 2). Moreover, Israel’s major employee union (the Histadrut) reveals in its publications the low management fees that it manages to secure for employees in major workplaces through contracts with private pension funds (Table 2). Table 1. Management Fees for Organised Workers and Workers in Large Workplaces   Maximum Management Fees (%)  Average Management Fees (%)  Management Fees for Employees in Five Major Workplaces (%)  Management Fees for Workers in the Civil Service (Employee Union Agreement with a Pension Fund) (%)  Annual management fees  0.5  0.28  0.21  0.045  Monthly management fees  6  3.17  2.01  0.45    Maximum Management Fees (%)  Average Management Fees (%)  Management Fees for Employees in Five Major Workplaces (%)  Management Fees for Workers in the Civil Service (Employee Union Agreement with a Pension Fund) (%)  Annual management fees  0.5  0.28  0.21  0.045  Monthly management fees  6  3.17  2.01  0.45  Makefet Financial Report (2013). Available at https://www.migdal.co.il/He/MigdalMakefet/Solutions/Documents/FinancialReports/2013/migdalmakefet_2013.pdf (date last accessed 25 July 2017). Pensia-Net Website. Available at http://pensyanet.cma.gov.il/ (date last accessed 25 July 2017); Histadrut’s Website: http://hahistadrut.org.il/files/Forms/news/minhelet-hagimlaot6.2015.pdf (date last accessed 25 July 2017). View Large Table 1. Management Fees for Organised Workers and Workers in Large Workplaces   Maximum Management Fees (%)  Average Management Fees (%)  Management Fees for Employees in Five Major Workplaces (%)  Management Fees for Workers in the Civil Service (Employee Union Agreement with a Pension Fund) (%)  Annual management fees  0.5  0.28  0.21  0.045  Monthly management fees  6  3.17  2.01  0.45    Maximum Management Fees (%)  Average Management Fees (%)  Management Fees for Employees in Five Major Workplaces (%)  Management Fees for Workers in the Civil Service (Employee Union Agreement with a Pension Fund) (%)  Annual management fees  0.5  0.28  0.21  0.045  Monthly management fees  6  3.17  2.01  0.45  Makefet Financial Report (2013). Available at https://www.migdal.co.il/He/MigdalMakefet/Solutions/Documents/FinancialReports/2013/migdalmakefet_2013.pdf (date last accessed 25 July 2017). Pensia-Net Website. Available at http://pensyanet.cma.gov.il/ (date last accessed 25 July 2017); Histadrut’s Website: http://hahistadrut.org.il/files/Forms/news/minhelet-hagimlaot6.2015.pdf (date last accessed 25 July 2017). View Large Table 2. Makefet Pension Fund: Number of Members According to Percentage Management Fees   Monthly Management Fees  Annual Management Fees  0–1.5%  1.5–3%  3–4.5%  4.5–6%  0–0.15%  2,261  2,645  7,340  709  0.15–0.25%  68,821  110,199  53,784  7,795  0.25–0.4%  4,746  2,038  11,999  1,832  0.4–0.5%  312,058  5,167  13,469  152,929    Monthly Management Fees  Annual Management Fees  0–1.5%  1.5–3%  3–4.5%  4.5–6%  0–0.15%  2,261  2,645  7,340  709  0.15–0.25%  68,821  110,199  53,784  7,795  0.25–0.4%  4,746  2,038  11,999  1,832  0.4–0.5%  312,058  5,167  13,469  152,929  Makefet Pension Fund Financial Report (2013) Available at https://www.migdal.co.il/He/MigdalMakefet/Solutions/Documents/FinancialReports/2013/migdalmakefet_2013.pdf (date last accessed 25 July 2017). View Large Table 2. Makefet Pension Fund: Number of Members According to Percentage Management Fees   Monthly Management Fees  Annual Management Fees  0–1.5%  1.5–3%  3–4.5%  4.5–6%  0–0.15%  2,261  2,645  7,340  709  0.15–0.25%  68,821  110,199  53,784  7,795  0.25–0.4%  4,746  2,038  11,999  1,832  0.4–0.5%  312,058  5,167  13,469  152,929    Monthly Management Fees  Annual Management Fees  0–1.5%  1.5–3%  3–4.5%  4.5–6%  0–0.15%  2,261  2,645  7,340  709  0.15–0.25%  68,821  110,199  53,784  7,795  0.25–0.4%  4,746  2,038  11,999  1,832  0.4–0.5%  312,058  5,167  13,469  152,929  Makefet Pension Fund Financial Report (2013) Available at https://www.migdal.co.il/He/MigdalMakefet/Solutions/Documents/FinancialReports/2013/migdalmakefet_2013.pdf (date last accessed 25 July 2017). View Large (iii)  Risks Regarding Capital Market Returns In Israeli DC schemes, all risks and costs regarding capital market returns are on the employees. The Israeli Ministry of Finance data show that in years of economic crisis (such as 2008), savers lose large sums from their pensions.57 (iv)  Risks Regarding Life Expectancy Life expectancy is on the rise in Israel as in all industrialised countries. In 1971, life expectancy at birth was 71.8; in 1991, it was 76.8; in 2014, it was 82.2.58 As life expectancy rises, DC pension funds reduce pension benefits (by increasing the annuity conversion factors). B.  Publicly Managed (DB) Plans Charge Lower Management Fees than Privately Managed Plans (DB and DC) According to the findings, management fees in (DB) pension funds managed by the state are much lower than management fees in (DB and DC) pension funds managed by private entities. In all (DB) pension funds managed by the state, the management fees are close to zero and include only operating fees (Table 3). Table 3. Management Fees   Publicly Managed DB Plan (for Civil Service Employees) (1)  Publicly Managed DB Plan (8)  Privately Managed DB (10)  Privately Managed DC (All-Inclusive) (10 Funds)  Privately Managed DC (Supplemental) (10 Funds)  Monthly feesa  0  Only operating fees  60% of the funds—above 7%  6%  4%  Annual feesb  0    60% of the funds—above 0.6%  0.5%  1.05%  Fees from pensioners  0    70% of the funds—above 0.6%  0.5%  0.5%    Publicly Managed DB Plan (for Civil Service Employees) (1)  Publicly Managed DB Plan (8)  Privately Managed DB (10)  Privately Managed DC (All-Inclusive) (10 Funds)  Privately Managed DC (Supplemental) (10 Funds)  Monthly feesa  0  Only operating fees  60% of the funds—above 7%  6%  4%  Annual feesb  0    60% of the funds—above 0.6%  0.5%  1.05%  Fees from pensioners  0    70% of the funds—above 0.6%  0.5%  0.5%  aCalculated as a percentage of the monthly deductions to the fund. bCalculated as a percentage of the total value of the fund. View Large Table 3. Management Fees   Publicly Managed DB Plan (for Civil Service Employees) (1)  Publicly Managed DB Plan (8)  Privately Managed DB (10)  Privately Managed DC (All-Inclusive) (10 Funds)  Privately Managed DC (Supplemental) (10 Funds)  Monthly feesa  0  Only operating fees  60% of the funds—above 7%  6%  4%  Annual feesb  0    60% of the funds—above 0.6%  0.5%  1.05%  Fees from pensioners  0    70% of the funds—above 0.6%  0.5%  0.5%    Publicly Managed DB Plan (for Civil Service Employees) (1)  Publicly Managed DB Plan (8)  Privately Managed DB (10)  Privately Managed DC (All-Inclusive) (10 Funds)  Privately Managed DC (Supplemental) (10 Funds)  Monthly feesa  0  Only operating fees  60% of the funds—above 7%  6%  4%  Annual feesb  0    60% of the funds—above 0.6%  0.5%  1.05%  Fees from pensioners  0    70% of the funds—above 0.6%  0.5%  0.5%  aCalculated as a percentage of the monthly deductions to the fund. bCalculated as a percentage of the total value of the fund. View Large Moreover, the findings also show that private DB schemes charge higher management fees than private DC schemes. In all private DC schemes (all-inclusive and supplemental), the bylaws enable the fund to collect from its members the maximum management fees allowed by law. With regard to private DB schemes, no regulation regarding management fees exists aside from Finance Ministry circulars. Here, the differences between the funds are immense. Moreover, 30% of the pension funds do not publish the management fees they collect from members and pensioners, but 70% of the pension funds do. C.  Public Schemes Provide More Information to Members Than Private Schemes The findings show that public (DB) schemes tend to provide more information to members than private (DB and DC) schemes. Between the private schemes, the findings show that private schemes that are open to new members and to competition (DC schemes) provide much more information to members than private schemes that are not open to competition (DB schemes). As shown in Table 4, several pension funds did not publish in their bylaws the annuity conversion factor of their members. Other pension funds published only partial data regarding the conversion factor. Three pension funds (all of them private DB) did not publish in their bylaws the maximum amount of management fees. One bylaw excludes ‘certain professions’ from membership, without actually specifying those professions. Table 4. Providing Information to Members in the Pension Funds Bylaws   Publicly Managed DB Plan (for Civil Service Employees) (1)  Publicly Managed DB Plan (8)  Privately Managed DB (10)  Privately Managed DC (All-Inclusive) (10 Funds)  Privately managed DC (Supplemental) (10 Funds)  The bylaw is published on the fund website  100%  100%  90%  100% 3/10; 1 not published at all)  100% 2/10, 1 not published at all)  Annuity conversion factor is published  100%  100%  Only 50% of the funds published the conversion factor  Only 70% of the funds published full data about conversion factors  Only 80% of the funds published full data about conversion factors  Management fees are published  100%  100%  70%  100%  100%    Publicly Managed DB Plan (for Civil Service Employees) (1)  Publicly Managed DB Plan (8)  Privately Managed DB (10)  Privately Managed DC (All-Inclusive) (10 Funds)  Privately managed DC (Supplemental) (10 Funds)  The bylaw is published on the fund website  100%  100%  90%  100% 3/10; 1 not published at all)  100% 2/10, 1 not published at all)  Annuity conversion factor is published  100%  100%  Only 50% of the funds published the conversion factor  Only 70% of the funds published full data about conversion factors  Only 80% of the funds published full data about conversion factors  Management fees are published  100%  100%  70%  100%  100%  View Large Table 4. Providing Information to Members in the Pension Funds Bylaws   Publicly Managed DB Plan (for Civil Service Employees) (1)  Publicly Managed DB Plan (8)  Privately Managed DB (10)  Privately Managed DC (All-Inclusive) (10 Funds)  Privately managed DC (Supplemental) (10 Funds)  The bylaw is published on the fund website  100%  100%  90%  100% 3/10; 1 not published at all)  100% 2/10, 1 not published at all)  Annuity conversion factor is published  100%  100%  Only 50% of the funds published the conversion factor  Only 70% of the funds published full data about conversion factors  Only 80% of the funds published full data about conversion factors  Management fees are published  100%  100%  70%  100%  100%    Publicly Managed DB Plan (for Civil Service Employees) (1)  Publicly Managed DB Plan (8)  Privately Managed DB (10)  Privately Managed DC (All-Inclusive) (10 Funds)  Privately managed DC (Supplemental) (10 Funds)  The bylaw is published on the fund website  100%  100%  90%  100% 3/10; 1 not published at all)  100% 2/10, 1 not published at all)  Annuity conversion factor is published  100%  100%  Only 50% of the funds published the conversion factor  Only 70% of the funds published full data about conversion factors  Only 80% of the funds published full data about conversion factors  Management fees are published  100%  100%  70%  100%  100%  View Large D.  The Combination of Privately Managed Pensions and DC Schemes Leads to Inequality (i)  Inequality in the Admission Process The research shows that privately managed DC schemes contain eligibility terms and that the admission process to the funds is highly restrictive (Table 5). Not all employees can join the funds. First, most privately managed DC funds declare that a candidate may become a member of the fund only if the fund approves her membership. Second, all privately managed DC bylaws contain a provision that enables the fund to conduct a medical underwriting for the candidate’s membership. Based on the medical underwriting, the fund may approve or deny membership. Third, several bylaws declare that the fund may deny membership based on economic conditions. Fourth, while all bylaws enable pension funds to deny candidates membership, several bylaws declare explicitly that a pension fund may deny membership ‘for any reason whatsoever’. Fifth, one bylaw declares that ‘employees who work in certain professions will not be approved as members … The list of denied professions appears in appendix x.’ However, the pension fund did not add Appendix x (or any other appendix) to its bylaws. Sixth, many bylaws contain age restrictions, and only candidates aged 18 and older may apply to these funds. Table 5. Eligibility Terms for Insurance   Publicly Managed DB Plan (for Civil Service Employees) (1)  Publicly Managed DB Plan (8)  Privately Managed DB (10)  Privately Managed DC (All-INCLUSIVE) (10 Funds)  Privately Managed DC (Supplemental) (10 Funds)  Open to new members  No  No  No  Yes  Yes  Age limitation    No  30% (age 18 or 20)  40% (age 18)  10% (age 18)  Medical underwriting    0  0  100% (10/10)  50% (5/10)  Refusal due to economic factors    0  0  50% (2 for economic reasons, 3 for any reason)  30% (2 for economic reasons, 1 for any reason)  A right to refuse for any reason    0  0  30% (3/10)  10% (1/10)  A right to refuse to insure specific professions  No  0  0  10% (1/10)  0    Publicly Managed DB Plan (for Civil Service Employees) (1)  Publicly Managed DB Plan (8)  Privately Managed DB (10)  Privately Managed DC (All-INCLUSIVE) (10 Funds)  Privately Managed DC (Supplemental) (10 Funds)  Open to new members  No  No  No  Yes  Yes  Age limitation    No  30% (age 18 or 20)  40% (age 18)  10% (age 18)  Medical underwriting    0  0  100% (10/10)  50% (5/10)  Refusal due to economic factors    0  0  50% (2 for economic reasons, 3 for any reason)  30% (2 for economic reasons, 1 for any reason)  A right to refuse for any reason    0  0  30% (3/10)  10% (1/10)  A right to refuse to insure specific professions  No  0  0  10% (1/10)  0  View Large Table 5. Eligibility Terms for Insurance   Publicly Managed DB Plan (for Civil Service Employees) (1)  Publicly Managed DB Plan (8)  Privately Managed DB (10)  Privately Managed DC (All-INCLUSIVE) (10 Funds)  Privately Managed DC (Supplemental) (10 Funds)  Open to new members  No  No  No  Yes  Yes  Age limitation    No  30% (age 18 or 20)  40% (age 18)  10% (age 18)  Medical underwriting    0  0  100% (10/10)  50% (5/10)  Refusal due to economic factors    0  0  50% (2 for economic reasons, 3 for any reason)  30% (2 for economic reasons, 1 for any reason)  A right to refuse for any reason    0  0  30% (3/10)  10% (1/10)  A right to refuse to insure specific professions  No  0  0  10% (1/10)  0    Publicly Managed DB Plan (for Civil Service Employees) (1)  Publicly Managed DB Plan (8)  Privately Managed DB (10)  Privately Managed DC (All-INCLUSIVE) (10 Funds)  Privately Managed DC (Supplemental) (10 Funds)  Open to new members  No  No  No  Yes  Yes  Age limitation    No  30% (age 18 or 20)  40% (age 18)  10% (age 18)  Medical underwriting    0  0  100% (10/10)  50% (5/10)  Refusal due to economic factors    0  0  50% (2 for economic reasons, 3 for any reason)  30% (2 for economic reasons, 1 for any reason)  A right to refuse for any reason    0  0  30% (3/10)  10% (1/10)  A right to refuse to insure specific professions  No  0  0  10% (1/10)  0  View Large The Israeli Central Bureau of Statistics data show that, indeed, although there is mandatory pension in Israel, only 82% of all employees are insured.59 Those that are not insured are the most vulnerable workers.60 NGO reports show that the groups which suffer most from the admission process are workers with disabilities, elderly workers, overweight workers and foreign workers.61 (ii)  Gender Inequality Moreover, privately managed (DC) schemes provide unequal benefits on a gender basis. As shown in Table 6, all privately managed DC funds provide lower pension rights to women then to men. Due to women’s lower mortality, all funds set and use a higher annuity conversion factor for women, which results in lower annuities to women than to men. Table 6. Annuity Conversion Factorsa in Privately Managed DC Funds (the Higher the Annuity Conversion Factor, the Lower the Pension Will Be) Pension Fundsa  A  B  C  D  E  F  G  H  I  J  Male Year of Birth: 1990 Retirement age: 60  200.33  205.13  205.13  NP*  NP  205.13  205.13  NP  NP  NP  Female Year of Birth: 1990 Retirement Age: 60  216.86  219.15  219.15  NP  NP  219.15  219.15  NP  NP  NP  Male Year of Birth: 1960 Retirement Age: 67  163.75  167.14  167.14  NP  167.16  167.14  167.14  NP  NP  NP  Female Year of Birth: 1960 Retirement Age: 67  181.14  182.35  182.35  NP  182.36  182.35  182.35  NP  NP  NP  Pension Fundsa  A  B  C  D  E  F  G  H  I  J  Male Year of Birth: 1990 Retirement age: 60  200.33  205.13  205.13  NP*  NP  205.13  205.13  NP  NP  NP  Female Year of Birth: 1990 Retirement Age: 60  216.86  219.15  219.15  NP  NP  219.15  219.15  NP  NP  NP  Male Year of Birth: 1960 Retirement Age: 67  163.75  167.14  167.14  NP  167.16  167.14  167.14  NP  NP  NP  Female Year of Birth: 1960 Retirement Age: 67  181.14  182.35  182.35  NP  182.36  182.35  182.35  NP  NP  NP  NP, not published. aAn annuity conversion factor is a number that is used to convert the annuitant pension savings to a monthly benefit. The conversion factor is based on factors such as mortality of the annuitant. aA–J are the 10 all-inclusive new pension funds. View Large Table 6. Annuity Conversion Factorsa in Privately Managed DC Funds (the Higher the Annuity Conversion Factor, the Lower the Pension Will Be) Pension Fundsa  A  B  C  D  E  F  G  H  I  J  Male Year of Birth: 1990 Retirement age: 60  200.33  205.13  205.13  NP*  NP  205.13  205.13  NP  NP  NP  Female Year of Birth: 1990 Retirement Age: 60  216.86  219.15  219.15  NP  NP  219.15  219.15  NP  NP  NP  Male Year of Birth: 1960 Retirement Age: 67  163.75  167.14  167.14  NP  167.16  167.14  167.14  NP  NP  NP  Female Year of Birth: 1960 Retirement Age: 67  181.14  182.35  182.35  NP  182.36  182.35  182.35  NP  NP  NP  Pension Fundsa  A  B  C  D  E  F  G  H  I  J  Male Year of Birth: 1990 Retirement age: 60  200.33  205.13  205.13  NP*  NP  205.13  205.13  NP  NP  NP  Female Year of Birth: 1990 Retirement Age: 60  216.86  219.15  219.15  NP  NP  219.15  219.15  NP  NP  NP  Male Year of Birth: 1960 Retirement Age: 67  163.75  167.14  167.14  NP  167.16  167.14  167.14  NP  NP  NP  Female Year of Birth: 1960 Retirement Age: 67  181.14  182.35  182.35  NP  182.36  182.35  182.35  NP  NP  NP  NP, not published. aAn annuity conversion factor is a number that is used to convert the annuitant pension savings to a monthly benefit. The conversion factor is based on factors such as mortality of the annuitant. aA–J are the 10 all-inclusive new pension funds. View Large 7.  DISCUSSION A.  The shift of Pension Provision From DB to DC Entails a Significant Shift of Risk From Capital to Labour The research shows that DC plans do indeed impose risks and costs on savers (ie, employees). Pension systems differ from one another in the ways they allocate risks between the employees, the employer, the state and the pension fund. The risks include investment risk, individual mortality risk, cohort mortality risk, salary risk and job tenure risk.62 The findings show that participants do indeed bear the brunt of risk in DC plans, whereas in traditional DB plans, sponsoring employers assume most of the risks.63 While the shift from DB to DC plans was supposed to reduce risks and costs for the state and the employers, this is being accomplished at the employees’ expense, increasing their risks.64 Moreover, the findings show that these costs are very high. B.  Separately From the DB to DC Shift, Moving From Public Management to Private Management Is also an Opportunity for a Similar Shift of Risk The findings bolster the assumption that privately managed pension funds shift costs from the state and the employers to the employees.65 The shift from state-managed DB pensions to privately managed DC pensions in Israel, as in other countries, was due (among other reasons) to economic and actuarial concerns, the aim being to lower costs for the state and ensure the funds’ stability. Nonetheless, this study shows that private pensions do not save costs; rather, they just transfer the costs from the state and the employers to the employees. In fact, the findings show that privately managed pension funds impose heavy costs on the employees and might in the future impose costs on the state. Pension benefits in privately managed funds are much lower than pension benefits in publicly managed funds. This is true not only when we compare publicly managed DB plans to privately managed DC plans but also when we compare publicly managed DB plans to privately managed DB plans. Moreover, management fees in privately managed (DB and DC) funds are significantly higher than in publicly managed funds. The high management fees reduce the benefits of the members. The literature provides several explanations for the above findings, the most prominent being ‘economies of scale’ and the idea of a ‘rational utility-optimising individual’. According to the ‘economies of scale’ literature, large pension funds are able to manage employees’ savings more efficiently and at reduced costs, as compared to smaller funds.66 In Israel, the public management of the funds enjoys the advantage of ‘economies of scale’. According to the idea of a ‘rational utility-optimising individual’. owners of private funds will seek ways to increase their profits by charging high management fees (as well as making the fund more efficient). In contrast, managers of public pension funds do not have the same incentives.67 C.  The Shifts From DB to DC and From Public to Private Management Involve a Shift in Governance, Which Exposes Pension Scheme Members to a High Likelihood of Lower Returns as well as Entrenching Gender and income Inequalities The findings bolster the assumption that privately managed pension funds increase inequality between employees.68 They show that managers of a private pension fund attempt to utilise its profit by providing better services, benefits and fees to attract more ‘profitable customers’, such as employees who work in large or unionised workplaces. As a result, the weakest employees might pay higher management fees and receive lower benefits. (i)  Inequality in Management Fees All the bylaws of privately managed funds define the maximum amount of management fees that the fund may collect from its members. Funds commit in their bylaws not to collect higher management fees than the defined ceiling. However, they do not require all members to pay the highest amount of management fees. In fact, the funds provide substantial management fee discounts to workers in large workplaces as well as to unionised workers. The employees who pay the highest management fees are mostly the weakest workers who work in small places and who are not represented by strong employee unions. (ii) Inequality in the Admission Process Inequality also applies to the possibility of joining a pension fund. Not everybody can join the funds. A worker with a disability—even an overweight or elderly worker—might be unable to find a fund that will agree to insure him.69 Pension funds often refuse to insure foreign workers and Palestinian workers.70 All the bylaws of all-inclusive new pension funds and half of the bylaws of supplemental new pension funds declare that a candidate can become a member of the fund only if the fund approves her membership.71 All funds may deny a candidate on the basis of a medical underwriting. However, the funds do not perform a medical underwriting for all candidates. They automatically insure, as a group, without a medical underwriting, organised workers and workers who are employed in large workplaces. Those who are not accepted to the funds are the weakest workers who have a medical problem or a disability—the cleaning lady, the waiter and the babysitter. (iii) Gender Inequality Lastly, the findings lend support to the literature with regard to gender inequality.72 Privately managed DC funds were supposed to be more accommodating of men and women than publicly managed DB funds. In the past, several DB funds even explicitly excluded women.73 While today all funds are open to both women and men, in DC funds women are more exposed than men to salary risks and job tenure risks.74 Moreover, the findings show that Israeli DC funds set and use a much higher annuity conversion factor for women than for men (due to women’s higher life expectancy). As a result, women receive a lower pension annuity than do men. D.  Competition and Regulation: Importance and Limits (i) Competition The findings highlight the importance of competition between privately managed pension funds. They show that privately managed DB funds which are closed to new members and therefore not open to competition provide inferior rights to those provided by privately managed DC funds which are open to new members and to competition: Management fees are much higher in closed funds than in open funds; the bylaws of closed funds convey less information to their members than those of funds that are open to new members. These findings serve as a warning sign to the increasing number of employers and states which are closing DB pension funds to new members without offering any security to the elderly members and pensioners who are ‘locked’ in the fund.75 Nonetheless, the findings also lend support to the literature regarding behavioural biases and lack of knowledge that reduce competition in the pension market.76 In contrast to DB funds, private DC funds are open to new members and to competition. These funds are supposed to facilitate mobility between jobs and between funds. The findings show that in reality competition between DC funds is limited: all bylaws enable the fund to collect from its members the maximum management fees allowed by law; all bylaws restrict eligibility of candidates for membership; and several bylaws set out identical annuity conversion factors. (ii) Regulation The findings lend support to the literature regarding the need for strict regulation in the pension market77 in several ways. First, they highlight the importance of strict regulation of management fees, showing that when there is no regulatory ceiling to pension funds’ management fees – as in the case of the privately managed DB funds – many do not publish the management fees they charge. Moreover, without regulation, several DB funds charge outrageous fees. Second, the findings highlight the importance of a publicly managed DC pension fund, such as the UK’s National Employment Savings Trust (NEST).78 They show that without a publicly managed fund, workers may be unable to find a fund that will insure them. Nonetheless, the findings also highlight the limits of regulation in the pension market, lending support to the literature regarding the high agency costs of privatisation and the limits of regulators in enforcing the law. Israeli law requires funds to provide information to their members in their bylaws regarding pension rights, management fees and eligibility terms.79 Nonetheless, the findings show that private schemes fail to provide adequate information to their members. Moreover, while the findings demonstrate the importance of a management fee ceiling, they also point to its limits, showing that when there is a management fee ceiling—as in the case of privately managed DC funds (all-inclusive and supplemental)—the funds ‘race’ to the ceiling. 8.  CONCLUDING REMARKS The world is aging. People live longer today than they did in the past and have fewer children. The ratio between the working population and retirees is tilting toward the latter. Governments, local municipalities, employees and regulators all around the world are eager to adjust pension systems to the new life expectancy. Many countries have replaced old public DB plans with private DC plans. While the old plans had many flaws, this article has shown that recent pension reforms have gone too far. The current article used new empirical data from Israel, including pension funds’ bylaws, financial reports of the funds and Central Bureau of Statistics data. The findings revealed major differences between DB funds and DC funds as well as between public managed DB funds and private managed DB funds. The article has shown that the shift of pension provision from DB to DC entails a significant shift of risk from capital to labour. Moreover, separately from the DB to DC shift, moving from public management to private management increases employees’ pension risks. Lastly, the paper shows that the combination of the shifts from DB to DC and from public to private management involves a shift in governance, which expose pension scheme members to a high likelihood of lower returns (due to higher management fees, lower benefits and a selective admission process) as well as to gender and income inequalities. In the new pension regime, not all employees lose. Private managed DC pension funds provide substantial benefits to organized workers who work in large firms. These workers pay low management fees and do not have to pass medical underwriting. The weakest employees are the ones who bear the high price of pension privatization. Footnotes 1 OECD, Pension at a Glance 2015 (2015) 368–371. 2 Office of National Statistics, Statistical Bulletin, Occupational Pension Schemes Survey, 2014 (2015). Available at http://www.ons.gov.uk/ons/dcp171778_417405.pdf (date last accessed 25 July 2017). 3 OECD, Pension at a Glance 2015 (2015); R. Holzmann, Global Pension Systems and Their Reform: Worldwide Drivers, Trends and Challenges (Washington, DC: The World Bank, 2012). 4 While the first pillar exists in all countries, its structure and value vary considerably between countries. OECD, Pension at a Glance (2015) p. 47. 5 OECD, Pension at a Glance: UK (2015). The average value of the first pillar in OECD countries is 22% of the average wage, besides reaching a high of 40% in New Zeland and a low of 6% in Turkey and Korea (Ibid). 6 Pay as You Go plans are unfunded pension plans that are financed directly from contributions from the plan provider. Cf: OECD, Private Pension: OECD Classification and Glossary 2005 (2005). Available at http://www.oecd.org/finance/private-pensions/38356329.pdf (date last accessed 25 July 2017). 7 OECD, Pension at a Glance 2015 (2015) 368–371. 8 Cf: M. A. Orenstein, Privatizing Pensions: The Transnational Campaign for Social Security Reform (Princeton, NJ: Princeton University Press, 2008) 26–28; G. Bonoli, The Politics of Pension Reform: Institutions and Policy Change in Western Europe (Cambridge: Cambridge University Press, 2000); E. Reynaud (ed.), Social Dialogue and Pension Reform (Geneva: International Labour Office, 2000). 9 Cf: E. Whitehouse, Pensions Panorama: Retirement-Income Systems in 53 Countries (Washington, DC: World Bank, 2007). 10 D. Blake, ‘Contracting Out the State Pension System: The British Experience of Carrots and Sticks’ in M. Rein and W. Schmahl (eds), Rethinking the Welfare State – The Political Economy of Pension Reform (Cheltenham: Edward Elgar Publishing, , 2004) 19; R. Minns and R. Martin, ‘Pension Funds in the United Kingdom: Centralization and Control’ in E. Reynaud, L. apRoberts, B. Davis and G. Hughes (eds), International Perspectives on Supplementary Pensions (London: Praeger, 1996) 221; B. Davies, ‘The Structure of Pension Reform in the United Kingdom’ in Emmanuel Reynaud (ed), Social Dialogue and Pension Reform (Geneva: ILO, 2000) 11–24. 11 See OECD, Pension at a Glance 2015 (2015) 368. 12 Cf: see D. Beland, ‘Does Labour Matter? Institutions, Labour Unions and Pension Reform in France and the United States’ (2001) 21 July. Pub. Pol. 155; L. Baccaro, ‘Negotiating the Italian Pension Reform with the Unions: Lessons for Corporatist Theory’(2002) 55 Industrial & Labor Relations Review 413; T. Ghilarducci and P. L. Libana, ‘Unions’ Role in Argentine and Chilean Pension Reform’ 28(4) World Development (2000) 753. Cf: M. Matsaganis, ‘Union Structures and Pension Outcomes in Greece’ (2007) 45(3) British Journal of Industrial Relations 537; G. Bonoli, ‘Pension Politics in France: Patterns of Co-Operation and Conflict in Two Recent Reforms’ (1997) 20(4) West European Politics 111–124. 13 Prominent in the literature dealing with analysis of the decline of the welfare state is the policy feedback or path dependency theory, according to which it is local politics that determines the nature and intensity of the attempts to harm or slash welfare state institutions, and future steps in the field are dependent on the steps of the past. See: P. Pierson, Dismantling the Welfare State? (Cambridge: Cambridge University Press, 1994); P. Pierson, ‘Increasing Returns, Path Dependence, and the Study of Politics’ (2000) 94(2) American Political Science Review 251; M. A. Orenstein, n.8. 14 R. Holzmann, Global Pension Systems and Their Reform: Worldwide Drivers, Trends and Challenges (Washington DC: World Bank, 2012) 2 (Argentina, Hungary Slovakia, Estonia, Latvia and Poland); M. Naczyk and S. Domonkos, ‘The Financial Crisis and Varities of Pension Privatisation Rversals in Eastern Europe’ 29 (2) Governance (2016) 167. 15 World Bank, Averting the Old Age Crisis (New York: OUP, 1994). But see: I. S. Gill, T. Packard and J. Yermo Keeping the Promise of Social Security in Latin America (Washington DC: World Bank, 2004). 16 C. Mesa-Lago, Changing Social Security in Latin America: Toward Alleviating the Social Costs of Economic Reform (Boulder, Colo: Lynne Rienner Pub., 1994); C. Mesa-Lago, ‘Pension Reform Around the World: Comparative Features and Performance of Structural Pension Reforms in Latin America’ (1998) 64 Brooklyn Law Review 771; C. Mesa-Lago, ‘Experiences in the Americas with Social Security Reform: Lessons for Workers and Unions’ in M. Simón Velasco (ed), Social Protection: What Workers Should Know (ILO, Labour Education 2000/4, No. 121(51) 2000). Available at http://www.ilo.org/public/english/protection/socsec/download/labeduce.pdf (date last accessed 25 July 2017); C. Mesa-Lago and K. Muller, ‘The Politics of Pension Reform in Latin America’ (2002) 34 J. Lat. Amer. Stud. 687; J. Pinera, ‘Empowering Workers: The Privatisation of Social Security in Chile’ (1995–1996) 15 Cato Journal 155. 17 OECD, Pensions at a Glance 2015 (2015). 18 C. Sutcliffe, Finance and Occupational Pensions: Theories and International Evidence (UK: Palgrave Macmillan, 2016) 13. 19 OECD, Pensions at a Glance (2013) 341–346; M. Palme, A. Sundén and P. Söderlind, Investment Choice in the Swedish Premium Plan (Center for Retirement Research at Boston College, 2005). 20 R. Holzmann, E. Palmer, D. Robalino, Nonfinancial Defined Contribution Pension Schemes in a Changing Pension World: Volume 1. Progress, Lessons, and Implementation (Washington DC: World Bank, 2012). 21 Adapted from: OECD, Private Pension: OECD Classification and Glossary 2005 (2005) Available at http://www.oecd.org/finance/private-pensions/38356329.pdf (date last accessed 25 July 2017); OECD, Pension at a Glance 2015 (2015); Office of National Statistics, Statistical Bulletin, Occupational Pension Schemes Survey, 2014 (2015) Available at http://www.ons.gov.uk/ons/dcp171778_417405.pdf (Definitions) (date last accessed 25 July 2017). 22 Adapted from: OECD, Private Pension: OECD Classification and Glossary 2005 (2005). Available at http://www.oecd.org/finance/private-pensions/38356329.pdf (date last accessed 25 July 2017); OECD, Pension at a Glance 2015 (2015); Office of Nathional Statistics, Statistical Bulletin, Occupational Pension Schemes Survey, 2014 (2015). Available at http://www.ons.gov.uk/ons/dcp171778_417405.pdf (Definitions) (date last accessed 25 July 2017). 23 See: Office of National Statistics, Statistical Bulletin, Occupational Pension Schemes Survey, 2014 (2015). Available at http://www.ons.gov.uk/ons/dcp171778_417405.pdf (date last accessed 25 July 2017). See also C. Kilpatrick, ‘The New UK Retirement Regime, Employment Law and Pensions’ (2008) 37 ILJ 1, 19–22. 24 T. Randle, P. Heinz Rudolph, Pension Risk and Risk-Based Supervision in Defined Contribution Pension Funds (Washington DC: World Bank, 2014). 25 OECD, Pensions Outlook 2012 (2012) 102–108. Available at http://www.keepeek.com/Digital-Asset-Management/oecd/finance-and-investment/oecd-pensions-outlook-2012_9789264169401-en#page1 (date last accessed 25 July 2017); OECD, Pensions Outlook 2014 (2014) 58–60. Available at http://www.keepeek.com/Digital-Asset-Management/oecd/finance-and-investment/oecd-pensions-outlook-2014_9789264222687-en#page1 (date last accessed 25 July 2017). OECD, Pension at a Glance 2015 (2015) 186. Automatic Enrollment is encouraged by regulation in the USA and Canada (Ibid). 26 L. H. Summers explained the popularity of mandated benefits: ‘As a general proposition, liberals rank alternative strategies in the order of public provision, mandated benefits, then no action for addressing social concerns. Conservatives have exactly the opposite preferences, ranking the alternatives no action, mandated benefits, and then public provision. With these preference patterns, it is little wonder that governments frequently turn to mandated benefits as a tool of social policy.’ (L. H. Summers, ‘Some Simple Economics of Mandated Benefits’ (1999) 79(2) The American Economic Association 177). 27 Two other important pension reforms which are not discussed here are the shift from pay-as-you-go to invested schemes and the shift from group schemes to single employer schemes. 28 In Chile, the privatized pension system was planned already in the early 1980s according to the recommendations of the World Bank and the International Monetary Fund. These international organizations pressured Chile to reform its pension system in line with their recommendations. See: E. Huber and J. D. Stephens, The Political Economy of Pension Reform: Latin America in Comparative Perspectives (Geneva: United Nations Research Institute for Social Development, Occasional Paper No. 7, 2000) 3–5. On international economic organizations’ pressure on European nations to reform their pension systems, see: K. Muller, ‘Latin American and East European Pension Reforms: Accounting for a Paradigm Shift,’ in M. Rein and W. Schmahl (eds), Rethinking the Welfare State: The Political Economy of Pension Reform (Cheltenham: Edward Elgar Publishing, 2004) 372, 380; R. Madrid, ‘The Politics and Economics of Pension Privatisation in Latin America’ (2002) 37(2) Latin American Research Review 159, 166–167. 29 M. A. Orenstein, n.8. 30 International movement of capital consists of insurance corporations and international pension funds that invest the insurees’ funds in various international funds. Both insurance corporations and investment funds are interest groups that have a vested interest in preserving and distributing private pension systems. Cf: M. Naczyk, ‘Agents of Privatization? Buisness Groups and the Rise of Pension Funds in Continental Europe’ (2013) 11 Socio-Economic Review 441. 31 M. A. Orenstein, n.8; N. Draper and E. Westerhout, ‘Privatizing Pensions: More than an Interesting Thought?’ (2012) SSRN Working Paper Series; OECD, Private Pensions Outlook 2008 (2009); OECD, Pensions Outlook 2014 (2014) Available at http://www.keepeek.com/Digital-Asset-Management/oecd/finance-and-investment/oecd-pensions-outlook-2014_9789264222687-en#page1 (date last accessed 25 July 2017). 32 M. A. Orenstein, n.8 at 185–186. 33 M. S. Feldstein ‘Rethinking Social Insurance’ (2005) 95(1) American Economic Review 1. 34 N. Barr and P. Diamond ‘The Economics of Pensions’ (2006) 22(1) Oxford Review of Economic Policy 15, 36–37; M. A. Orenstein, n.8 at 179–181; T. Randle, P. Heinz Rudolph, Pension Risk and Risk-Based Supervision in Defined Contribution Pension Funds (Washington DC: World Bank, 2014). See also A. L. Gustman, O. S. Mitchell and T. L. Steinmeier, ‘The Role of Pensions in the Labor Market: A Survey of the Literature’ (1994) 47(3) Industrial and Labor Relations Review 417, 418 (claiming that benefit levels in DC plans tend to be less generous than DB plans). About social risks, see also: G. Esping Anderson, Social Foundations of PostIndustrial Economics (1999) 40–43; G. Schmid, ‘Towards a Theory of Transitional Labour Markets’ in G. Schmid and B. Gazier (eds), The Dynamics of Full Employment: Social Integration Through Transitional Labour Market (Cheltenham: Edward Elgar Publishing, 2002) 152, 181–182. 35 D. McCarthy, The Optimal Allocation of Pension Risks in the Employment Contract (Department for Work and Pensions, Research Report 272, 2005). 36 A. M. O’Rand and K. M. Shuey, ‘Gender and the Devolution of Pension Risks in the US’ (2015) 55(2) Current Sociology 287. About the shift from DB towards DC, see: OECD, Pensions at a Glance 2015. Available at http://www.keepeek.com/Digital-Asset-Management/oecd/social-issues-migration-health/pensions-at-a-glance-2015_pension_glance-2015-en#page1 (date last accessed 25 July 2017). About the shift from DB towards DC in the UK, see, for example: C. Kilpatrick, ‘The New UK Retirement Regime, Employment Law and Pensions’ (2008) 37 ILJ 1, 19–22. 37 Cf.: K. M. Shuey and A. M. O’Rand, ‘Changing Demographics and New Pension Risks’ (2006) 28 (3) Research on Aging 317 (2006). 38 The high costs are mainly due to means-tested benefits provided by the public system. See: D. Mabbett, ‘The Ghost in the Machine: Pension Risks and Regulatory Responses in the United States and the United Kingdom’ (2002) 40(1) Politics & Society 107, 116. On the risks associated with pension privatisation to individuals and the state, see: J. Geanakoplos, O. S. Mitchell and S. P. Zeldes, ‘Would a Privatized Social Security System Really Pay a Higher Rate of Return?’ (NBER Working Paper No. 6713, 2000). 39 N. Barr and P. Diamond ‘The Economics of Pensions’ (2006) 22(1) Oxford Review of Economic Policy 15, 36–37; M. A. Orenstein, n.8 at 179–181. 40 Cf: V. Bertrand, ‘Mandatory Pensions and the Intensity of Adverse Selection in Life Insurance Markets’ (2003) 70 Journal of Risk and Insurance 527. See also: G. A. Akerlof, ‘The Market for “Lemons”: Quality Uncertainty and the Market Mechanism’ (1970) 84(3) The Quarterly Journal of Economics 488. 41 J. Beshears, J. J. Choi, D. Laibson, B. C. Madrian, ‘Behavioral Economics Perspectives on Public Sector Pension Plans’ (2011) 10 Journal of Pension Economics and Finance 315; A. L. Gustman, T. Steinmeier and N. Tabatabai, ‘Imperfect Knowledge of Plan Type’ (2007) NBER Working Paper No. 13379; S. Chan and A. Huff Stevens, ‘What You Don’t Know Can’t Help You: Worker Knowledge and Retirement Decision-Making’ (2008) 90(2) The Review of Economics and Statistics 253; J. J. Choi, D. Laibson, B. C. Madrian, ‘$100 Bills on the Sidewalk: Suboptimal Investment in 401(k) Plans’ (2011), 93(3) Review of Economics and Statistics 748. 42 S. O’Grady, ‘How our lack of pensions knowledge could cost us thousands of pounds,’ Sunday Express (May 27, 2015). About the lack of knowledge in a DC pension scheme in the UK, see: A. Byrne, ‘Employee Saving and Investment Decisions in Defined Contribution Pension Plans: Survey Evidence from the UK’ (2007) 16 Financial Services Review. 43 Annamaria Lusardi and Olivia S. Mitchell, ‘Financial Literacy and Retirement Preparedness: Evidence and Implications for Financial Education’ (2007) 42(1) Business Economics 35–44. 44 D. M. Weiss, ‘Paternalistic Pension Policy: Psychological Evidence and Economic Theory’ (1991) 58 U. Chi. L. Rev. 1275, 1297–1300. 45 J. D. Wright and D. H. Ginsburg, ‘Behavioral Law and Economics: Its Origins, Fatal Flaws and Implications for Liberty’ (2012) 106(3) Northwestern University Law Review 1044; O. Bar-Gill, ‘Seduction by Plastic’ (2004) 98 NW. U. L. Rev.1375–1376. 46 A. Lusardi and O. S. Mitchell 2007, n.43. 47 O. S. Mitchell, ‘Administrative Costs in Public and Private Retirement Systems’ in Martin Feldstein (ed), Privatizing Social Security (Chicago: University of Chicago Press, 1998) 403; A. Dobrongov and M. Murthi, ‘Administrative Fees and Costs of Mandatory Private Pensions in Transition Economies’ (2005) 4(1) Journal of Pension Economics and Finance 31. About privatisation and agency costs, see: David E. M. Sappington and J. E. Stiglitz, ‘Privatization, Information and Incentives’ (1987) Journal of Policy Analysis and Management 567; D. Maritmort, ‘An Agency Perspective on the Costs and Benefits of Privatisation’ (2006) 30(1) Journal of Regulatory Economics 5; R. J. Gilson and J. N. Gordon, ‘The Agency Costs of Agency Capitalism: Activist Investors and the Revaluation of Governance Rights’ (2011) 113 Columbia Law Review 863. 48 OECD, Private Pensions Outlook2008 (2009) 144. 49 Ibid. 50 In this sense, Israel’s pension system is consistent with the Word Bank recommendations. See Averting the Old Age Crisis. Available at http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/1994/09/01/000009265_3970311123336/Rendered/PDF/multi_page.pdf (date last accessed 25 July 2017). 51 Retirees are entitled to the benefits only when they reach the age of 62 (women) or 67 (men). According to the Retirement Age Law, recommendations by the committee regarding women’s retirement age will be submitted by 2016. See Retirement Age Law 2004, Arts. 3–4; The National Insurance Law (consolidated version) 1995, Art. 245. 52 For the sums of the benefits, see The National Insurance Institute of Israel website. Available at http://www.btl.gov.il/English%20homepage/Pages/default.aspx (date last accessed 25 July 2017). See also OECD Reviews of Labour Market and Social Policies in Israel (OECD Publishing 2010) 188. 53 Israeli schemes are all managed by single firms (and not by managers acting on behalf of several firms in the sector). 54 Ten are All-Inclusive New Pension Funds (which include disability and survivers insurance) and 10 are New General Pension Funds. 55 About labour market transitions see: G. Schmid 2002, n.34. For a discussion about the standard employment relationship see: Z. Adams and S. Deakin, ‘Institutional Solutions to Precariousness and Inequality in Labour Markets’ (2014) 52 British Journal of Industrial Relations 779–809 (Deakin and Adams show that nonstandard and precarious work relationships often complement the standard employment relationship via labour market transitions, and are not displacing it) 56 OECD, Pension at a Glance 2015. 57 In 2008, the average capital returns of DC pension funds in Israel was −11.8. In 2011, it was −1.2. (The Ministry of Finance, Annual Report of the Capital Market, Insurance and Savings Department 2015 [Hebrew]). 58 OECD data, Life Expectency at Birth. Available at https://data.oecd.org/healthstat/life-expectancy-at-birth.htm (date last accessed 25 July 2017). In the UK life expectancy at birth in 1971 was 71.9; in 1991, it was 75.9 and in 2014, it was 81.4 (Ibid). 59 State of Israel, Central Bureau of Statistics, Social Survey 2012 (June 2014) (Hebrew) 24–30. 60 Ibid. 61 E. Aflalo, ‘A Pension Fund - Only if you are Healthy’ (2008) The-Marker [Hebrew].Available at http://www.haaretz.co.il/misc/1.1324876 (date last accessed 25 July 2017). A. Sason and R. Linder, ‘Too Fat? You Won’t Enjoy Pension Benefits’ (2014) The Marker [Hebrew]. Available at http://www.themarker.com/markets/1.2488802 (date last accessed 25 July 2017). Recently several workers with disabilities filed a class action against pension funds that refused to admit them to the fund (Class Action 43232-05-12 from 21 May 2012); A. Adiv, ‘Violating the rights of Palestinian workers in Area C, Israeli firms provide no pension insurance’ (26 January 2014). Available at http://eng.wac-maan.org.il/?p=861 (date last accessed 25 July 2017). 62 See above. 63 OECD, Pension at a Glance 2015. Available at http://www.keepeek.com/Digital-Asset-Management/oecd/social-issues-migration-health/pensions-at-a-glance-2015_pension_glance-2015-en#page1 (date last accessed 25 July 2017). 64 A. M. O’Rand and K. M. Shuey, n.36. 65 N. Barr and P. Diamond, ‘The Economics of Pensions’ (2006) 22(1) Oxford Review of Economic Policy 15, 36–37; D. Mabbett, ‘The Ghost in the Machine: Pension Risks and Regulatory Responses in the United States and the United Kingdom’ (2012) 40(1) Politics & Society 107, 116; K. M. Shuey and A. M. O’Rand, n.37. 66 Scholars have conducted a series of studies (in countries such as the USA, Australia and the Netherlands) with regard to the optimal size of pension funds. The studies show that large pension funds save investment and management costs compared to relatively small pension funds. See: Olivia S. Mitchell and Emily S. Andrews, ‘Scale Economies in Private Multi-Employer Pension Systems’ (1981), 34(4) Industrial and Labor Relations Review 522–530; Helen Higgs and Andrew C Worthington, ‘Economies of Scale and Scope in Australian Superannuation (pension) funds’ (2012), 17 Pensions 252–259; Hazel Bateman and Olivia S. Mitchell, ‘New Evidence on Pension Plan Design and Administrative Expenses: The Australian Experience’ (2004), 3(1) Journal of Pension Economics and Finance 63–76; Jacob Bikker, ‘Is there an Optimal Pension Fund Size? A Scale-Economy Analysis of Administrative and Investment Costs’ (2013), DNB Working Paper 1–35. 67 S. H. Hanke, ‘The Necessity of Property Rights’ 47–53 in S.H. Hanke (ed), Privatisation and Development (San Francisco: Institute for Contemporary Studies Press, 1987). 68 N. Barr and P. Diamond, ‘The Economics of Pensions’ (2006) 22(1) Oxford Review of Economic Policy 15, 36–37; M. A. Orenstein, n.8 at 179–181. 69 E. Aflalo, n.65; A. Sason and R. Linder, n.65. Recently several workers with disabilities filed a class action against pension funds that refused to accept them to the fund (Class Action 43232-05-12 from 21.5.2012). 70 A. Adiv, n.65. 71 The pension funds are concerned with ‘adverse selection.’ For more on adverse selection, see: V. Bertrand, n.40. 72 A. M. O’Rand and K. M. Shuey, n.36; Cf: Kim M. Shuey and Angela M. O’Rand, n.37; S. Deakin and F. Wilkinson, The Law of the Labour Market, Ch. 3 (Oxford: Oxford University Press, 2005). 73 S. Fredman, ‘The Poverty of Equality: Pensions and the ECJ’ (1996) 25 ILJ 91; E. A. Whiteford, Adapting to Change: Occupational Pension Schemes, Women and Migrant Workers: An Examination of the Extent to Which Occupational Pension Schemes in the UK, the Netherlands and Germany Enable Women and Migrant Workers to Accrue Adequate Pensions (The Hague: Springer, 1996); R. Ellison, Pensions: Europe and Equality, 2nd edn (London: Sweet & Maxwell, 1995) 4. 74 K. M. Shuey and A. M. O’Rand, n.37. 75 CF: OECD, Pension at a Glance 2013 (2013) 190. Available at http://www.oecd.org/pensions/public-pensions/OECDPensionsAtAGlance2013.pdf. (date last accessed 25 July 2017); Pension at a Glance 2015 (2015) 188. Available at http://www.keepeek.com/Digital-Asset-Management/oecd/social-issues-migration-health/pensions-at-a-glance-2015_pension_glance-2015-en#page190 (date last accessed 25 July 2017); S. Deakin, ‘The Rise of Finance: What is driving it?, What might stop it? A Comment on “Finance and Labor: Perspectives on Risk, Inequality and Democracy” by Sanford Jacoby (2008–2009) 30 Comp. Lab. L. & Pol’y J 67, 72. 76 A. Lusardi and O. S. Mitchell 2007, n.43; John Beshears, J. J. Choi, D. Laibson, B. C. Madrian 2011, n.41; Alan L. Gustman, Thomas Steinmeier and Nahid Tabatabai, ‘Imperfect Knowledge of Plan Type’ (2007), NBER Working Paper No. 13379; Sewin Chan and Ann Huff Stevens, n.41; J. J. Choi, D. Laibson, B. C. Madrian, n.41. 77 Due to the behavioural biases in the pension market, research emphasises the importance of default rules as well as strict regulation of the pension market. See: R. H. Thaler & S. Benartzi, ‘Save More Tomorrow: Using Behavioral Economics to Increase Employee Saving’ (2004) 112(1) Journal of Public Economy 164; B. C. Madrian and D. F. Shea, ‘The Power of Suggestion: Inertia in 401(k) Participation and Saving Behavior’ (2001) 116(4) Quarterly Journal of Economics 1149; J. J. Choi, D. Laibson, B. Madrian and A. Metrick, ‘For Better Or For Worse: Default Effects and 401(k) Savings Behavior,’ in D. A. Wise (ed), Perspectives in the Economics of Aging (Chicago: The University of Chicago Press, 2004) 81; J. J. Choi, D. Laibson, B. C. Madrian and A. Metrick, ‘Defined Contribution Pensions: Plan Rules, Participant Decisions, and the Path of Least Resistance’ (2002) 16 Tax Policy and the Economy 67. 78 See: NEST website. Available at http://www.nestpensions.org.uk/schemeweb/NestWeb/public/home/contents/homepage.html (date last accessed 25 July 2017). 79 The Control of Financial Services (Provident Funds) Law 2005, Art. 16. 80 Adapted from: OECD, Private Pension: OECD Classification and Glossary 2005 (2005). Available at http://www.oecd.org/finance/private-pensions/38356329.pdf (date last accessed 25 July 2017); OECD, Pension at a Glance 2015 (2015); Office of National Statistics, Statistical Bulletin, Occupational Pension Schemes Survey, 2014 (2015). Available at http://www.ons.gov.uk/ons/dcp171778_417405.pdf (Definitions) (date last accessed 25 July 2017). APPENDIX A: DEFINITIONS80 Annuity conversion factor: A number that is used to convert the annuitant pension savings to a monthly benefit. The conversion factor is based on factors such as mortality of the annuitant. DB pension plans: Occupational pension plans where the rules of the scheme specify the rate of benefits to be paid. Benefits are linked through a formula to members’ wages or salaries, length of employment, or other factors. DC pension plans: Occupational pension plans under which employers and employees pay fixed contributions to the plan. Benefits are determined by the contributions paid, the investment return on those contributions (less charges), and the type of retirement income product purchased upon retirement. Private pension plan: A pension plan administered by an institution other than central government. APPENDIX B: PENSION FUNDS BYLAWS Bylaws of State-Run Veteran Pension Funds The Bylaw of Nativ Veteran Pension Fund The Bylaw of Mivtachim Veteran Pension Fund The Bylaw of the Histadrut’s Veteran Pension Fund The Bylaw of Makefet Veteran Pension Fund The Bylaw of Eged Veteran Pension Fund The Bylaw of Agricultural Workers’ Veteran Pension Fund The Bylaw of Construction Workers’ Veteran Pension Fund The Bylaw of Hadassah’s Veteran Pension Fund Bylaws of Balanced Veteran Pension Funds The Bylaw of Amit Veteran Pension Fund The Bylaw of Yozma Veteran Pension Fund The Bylaw of the Lawyers’ Veteran Pension Fund The Bylaw of Atoodot Veteran Pension Fund The Bylaw of Psagot Veteran Pension Fund The Bylaw of Dan Members’ Veteran Pension Fund The Bylaw of the Jewish Agency of Israel Veteran Pension Fund The Bylaw of Gilad Veteran Pension Fund The Bylaw of Atidit Veteran Pension Fund The Bylaw of Magen Veteran Pension Fund Bylaws of New General Pension Funds The Bylaw of Ayalon Pisga New General Pension Fund The Bylaw of Altshiler Shacham New General Pension Fund The Bylaw of Meitav Dash New General Pension Fund The Bylaw of Helman Aldubi New General Pension Fund The Bylaw of Harel Gilad New General Pension Fund The Bylaw of Phoenix New General Pension Fund The Bylaw of Mivtachim New General Pension Fund The Bylaw of Meitavit New General Pension Fund The Bylaw of Makefet New General Pension Fund The Bylaw of Psagot New General Pension Fund Bylaws of All-Inclusive New Pension Funds The Bylaw of Ayalon Pisga All-Inclusive New Pension Fund The Bylaw of Altshiler Shacham All-Inclusive New Pension Fund The Bylaw of Meitav Dash All-Inclusive New Pension Fund The Bylaw of Helman Aldubi All-Inclusive New Pension Fund The Bylaw of Harel Gilad All-Inclusive New Pension Fund The Bylaw of Phoenix All-Inclusive New Pension Fund The Bylaw of Mivtachim All-Inclusive New Pension Fund The Bylaw of Meitavit All-Inclusive New Pension Fund The Bylaw of Makefet All-Inclusive New Pension Fund The Bylaw of Psagot All-Inclusive New Pension Fund © Industrial Law Society; all rights reserved. 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Pension Privatisation: Benefits and Costs

Industrial Law Journal , Volume Advance Article – Oct 24, 2017

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Abstract

Abstract During the last 10 years, many OECD countries introduced reforms which included automatic enrolment or mandatory participation in privately managed pension schemes. The current article aims to reveal the benefits and costs of privately managed pension schemes. The article uses a study of pension schemes’ bylaws in Israel to study the degree to which the shift to privately operated DC schemes results in the transfer of risk from capital to labour and in the entrenchment of gender and income inequalities. The article shows that the shift of pension provision from defined benefit (DB) to defined contribution (DC) entails a significant shift of risk from capital to labour. Moreover, separately from the DB to DC shift, moving from public management to private management increases employees’ pension risks. Lastly, the paper shows that the combination of the shifts from DB to DC and from public to private management involves a shift in governance, which exposes pension scheme members to a high likelihood of lower returns as well as to gender and income inequalities. 1.  INTRODUCTION In October 2012, the UK government introduced a policy of automatic enrolment into workplace private pension schemes. Once the move is completed, in February 2018, all UK employers will have a duty to enrol all qualifying workers into a qualifying pension scheme.1 This pension reform will lead to a sharp expansion of UK employees who are members of privately managed pension schemes.2 This act of the UK government might seem, at first sight, to be a social-democratic effort to expand employees’ pension rights and to strengthen labour. Nonetheless, the act can also be seen as part of a long process of pension privatisation in the UK. During the last 10 years, many OECD countries introduced reforms which included automatic enrolment or mandatory participation in privately managed pension schemes. This paper aims to reveal the benefits and costs of mandatory privately managed pension schemes. The paper uses a study of pension schemes’ bylaws in Israel to study the degree to which the shift to private operated DC schemes results in the transfer of risk from capital to labour and in the entrenchment of gender and income inequalities. The second part of this paper (after the introduction) will show that current pension reforms in the UK as well as in other OECD countries are part of a large global process of privatisation of pension schemes. The third part of the paper will review current discussion regarding pension privatisation. The fourth part will examine the case study of Israel. Israel adopted the World Bank recommendation with regard to pension privatisation at a relatively early stage and therefore serves as an interesting case study for evaluating the costs and benefits of pension privatisation. The fifth part will present the methodology. The study will use new empirical data from Israel including pension funds’ bylaws, financial reports of the funds and Central Bureau of Statistics data. The sixth part will present the findings. The paper will show that the shift of pension provision from DB to DC entails a significant shift of risk from capital to labour. Moreover, the paper shows that separately from the DB to DC shift, moving from public management to private management entails high risks on employees. Lastly, the combination of the shifts from DB to DC and from public to private management exposes pension scheme members to a high likelihood of lower returns as well as to gender and income inequalities. The seventh part will discuss the implications that the case study of Israel has in store for the current debate on privatisation. The last part will conclude. 2.  PENSION PRIVATISATION: DEFINING THE TERMS A.  Three Pillars Pension systems in OECD countries are comprised of three pillars.3 The first pillar is, at least partly, a publicly managed pension pillar and includes social security benefits. Its purpose is to provide the residents of the country (or the citizens or the employees depending on the system) an adequate standard of living.4 In the UK, the value of the first pillar (the new state pension introduced in April 2016) is 22% of the average wage.5 The first pillar was (and still is in many countries) structured as as a ‘Pay as you Go’ scheme.6 The second pillar is occupational pension. Its purpose is to provide the retiree with a standard of living that is as close as possible to the standard of living she was used to before retirement. The second pillar can be voluntary or mandatory, privately or publicly managed. In the UK, as noted above, the government introduced in 2012 an automatic enrolment reform.7 The third pillar is private savings. The current paper focuses on the second pillar and its privatisation. Nonetheless, all three pillars of the pension systems are connected to each other. If, for instance, the first pillar provides a high adequate public pension to a country’s residents, there is less need of a decent second pillar. The opposite is true as well. If the first pillar is very low, residents must rely on both pillars. Therefore, although this paper focuses on the privatisation of the second pillar of the pension system, it will touch a bit also on the first pillar. B.  Pension Privatisation For the purpose of this current paper, the term ‘pension privatisation’ is defined as the process of shifting the control, management and finance of pensions from the public sphere to the private sphere. The process of pension privatisation occurs in different ways in different countries and at different times.8 Every country has it unique pension system with its unique combination of public and private involvement.9 For example, in the UK, prior to the new State Pension (of April 2016) employees have been able to choose to ‘contract out’ of part of the additional element of the State Pension and join an occupational or personal pension arrangement instead.10 The adoption of the new State Pension led to the abolition of the option of contracting out.11 Each unique system is connected to the particular country’s welfare regime, industrial relations system and economic situation. A pension privatisation reform which can occur in one country might not necessarily occur in another country.12 Moreover, pension reforms that occurred in one period of time might not necessarily occur in another period. The privatisation of pensions in many countries is a long process which includes many small reforms. Each reform enabled the next reform.13 Moreover, in several countries, a reverse trend can be identified, where countries have taken back the control, management and finance of their pension systems (eg, Argentina, Hungary Slovakia, Estonia, Latvia and Poland).14 Pension privatisation can, therefore, be seen as a spectrum where countries differ from each other by the amount of privatisation. While pension privatisation can take many forms, several primary forms of privatisation can be identified. In fact, all of the forms described below are connected to each other. All of them are part of the World Bank recommendations from 1994. In 1994, the Word Bank published an influential report entitled ‘Averting the Old Age Crisis’.15 In it, the World Bank recommended that countries adopt a mandatory multi-pillar pension system with a mandatory private pillar. Namely, employers and employees would have to provide monthly contributions to privately managed DC pension schemes. While the World Bank recommendations were not called ‘pension privatisation’, they, in fact, led to a shift in the control, management and finance of pensions from the public sphere to the private sphere. The first characteristic of the World Bank model is its embrace of privately managed schemes. The model includes, therefore, a shift from publicly managed to privately managed schemes. The shift from publicly to privately managed schemes has several variations in different countries and at different times. It includes one or more of the following processes: (a) privatisation of all or part of the first pillar of the pension system, or in other words, involvement (on different levels) of privately managed funds in the first pillar of the pension system (Chile is the classic example of a country that has replaced its entire public pension system (first pillar) with privately managed pensions);16 (b) privatisation of the public service pension scheme in a country; and (c) a shift from employee union management of pension funds to private management. All of these processes lead (in different ways) to pension systems which are largely managed by private entities. The second characteristic of the World Bank model is its embrace of defined contribution (DC) schemes. The model includes, therefore, a shift from defined benefit schemes to defined contribution schemes. During the last decades, many countries (and employers) have shut down defined benefit (DB) pension schemes in favour of new DC schemes.17 Theoretically, there is no connection between the shift from DB to DC and pension privatisation. Both types of pension schemes, DB and DC, could be either publicly or privately managed. In the UK system, for example, several DB schemes are managed by the state and others are managed by private entities.18 In Sweden, as a small part of the first pillar, employees can choose between investing in a publicly or privately managed DC system (the ‘premium pension’).19 Publicly managed DC funds exist also in Italy, Latvia and Poland.20 Nonetheless, notwithstanding the examples above, the shift from public management to private management often comes hand in hand with the shift from DB to DC. Moreover, in several cases, the shift from DB to DC enabled the shift from public management to private management. In fact, the recommendation of the World Bank in 1994 was for states to have a mandated second pillar with privately managed DC pension schemes. In a DB scheme, the terms of the scheme set out the pension to which the employee is entitled, using a formula which generally refers to the employee’s length of service and salary level. In a DC scheme, the degree and nature of the employees’ contributions is set out, but the level of the financial pension is not guaranteed.21 The effect is that in a DB scheme, any shortfall resulting from poor investment performance is met by the employer, while in a DC scheme, it falls on the employee.22 In most OECD countries (including the UK), there is a growing share of active members in privately managed DC pension plans, and a decreasing number of members in privately managed DB pension plans. In the UK, active membership of private-sector DC schemes, which had remained at around 1 million since 2006, rose to 3.2 million in 2014. Active membership in private-sector DB schemes remained at 1.6 million in 2014. Active membership in open private-sector DB schemes fell to 0.6 million in 2014 from 1.4 million in 2006.23 There are several reasons for the shift from DB to DC, among them the sharp rise in life expectancy Due to the sharp rise in life expectancy, besides other causes, many DB plans have encountered an actuarial deficit. Some have declared bankruptcy. Nonetheless, the shift from DB to DC poses several risks (see discussion below).24 The third characteristic of the model is the reduction of fiscal subsidies. Several countries aim to reduce public spending in the second pillar and therefore to reduce the subsidies, tax deductions and credits they used to provide to savers. Instead, more pension savings are invested in the capital market. The reduction of public spending shifts the risk from the state to the savers. The fourth characteristic of the World Bank model is that all countries should have a mandatory second pillar of privately managed pensions. In light of the World Bank recommendations, most OECD countries have passed reforms to broaden the coverage of private pensions. These reforms have included mandatory pension savings (eg, Australia, Chile, Estonia, Finland, Iceland, Israel, Sweden and Switzerland) and automatic enrolment (eg, the UK, New Zealand and Italy).25 These reforms seem to be, at first sight, part of a social-democratic trend of expanding employees’ right to a decent pension. Nonetheless, they are, in fact, part of the process of pension privatisation.26 These reforms enable countries to reduce public spending on pensions. They enable countries to reduce the first pillar of the pension system today or in the future. Moreover, they enable countries to reduce the ‘zero’ pillar (the pillar that is based on income tests). In that sense, these reforms are most problematic to low-wage workers who will find the contribution to a pension system difficult, and who will lose the public pension they would have received otherwise.27 3.  THE QUESTION OF PENSION PRIVATISATION International financial institutions (such as the World Bank and the International Monetary Fund) played an important role in the diffusion of pension privatisation from country to country.28 Mitchell A. Orenstein provided an in-depth look at the activities of a core group of pension reform advocates (including World Bank and USAID representatives) who have operated globally and advised top political leaders in dozens of countries around the world.29 Transnational actors used economic incentives and new knowledge and ideas to convince policymakers to conduct private pension reforms. Moreover, increased cross-border capital flows have also led to changing approaches to pension fund regulation.30 Nonetheless, in parallel to the expansion of pension privatisation, policymakers and scholars have engaged in a wide-ranging debate regarding the benefits and costs of pension privatisation.31 The debate, in large, concerns the shift towards a mandatory privately managed pension with DC schemes, where the money is invested in the capital market. Nonetheless, some of the debate lays emphasis on specific parts of the privatisation (eg, only the shift towards private management of the funds or only on the shift from DB to DC). Supporters of privatisation point to the advantages of freedom, transparency and private management. Private management is supposedly more efficient and more flexible than public management. Private managers specialise in the capital market and should, therefore, achieve higher returns on their investments than public managers. Moreover, private pensions would reduce state expenses on pension management and enable the state to reduce taxes or to allocate money to other essential goals. Furthermore, investment of private pension money in capital markets may increase economic growth.32 Lastly, pension privatisation, which allows individuals to choose among options, improves social wellbeing and individual autonomy.33 Opponents of pension privatisation, on the other hand, highlight the significant risks of privately managed DC pension plans. According to opponents of privatisation, while public pension plans impose risks on the state, privately managed DC pension plans impose risks and costs on the savers (that is, the employees).34 The risks that are imposed on the savers include: (1) investment risk—the risk of unpredictable fluctuations in asset returns from year to year; (2) individual mortality risk—the possibility that individual workers may die very young or live until they are very old; (3) cohort mortality risk—the life expectancy of an entire cohort of workers may change in unanticipated ways; (4) salary risk—workers do not know how much they are going to earn later on in their lives and (5) job tenure risk—the risk that employees’ actual tenure in jobs may be longer or shorter than anticipated.35 DC plans shift all of the above risks to employees. While all employees are at risk in the new DC regime, women and workers with atypical careers are at greater risk than men.36 Women, who on average earn less than men and work fewer years than men, are more exposed to ‘salary risks’ and ‘job tenure risk’, resulting in lower pension benefits.37 Moreover, DC plans may transfer risk back to the state when they fail to pay out.38 In cases of bad DC programs, the state will often pay means-tested public pension benefits to the retirees. Moreover, according to the literature, privately managed DC pension funds increase inequality between employees.39 Managers of a private pension fund might attempt to utilise its profit by providing better services, benefits and fees to ‘profitable customers’, such as employees who work in large or unionised workplaces. As a result, the weakest employees might pay higher management fees and receive lower benefits. Opponents of pension privatisation (which is often associated with individual decision making) also point to the high costs of decision making in a context of asymmetric information. Both the pension fund and the insured suffer from disinformation. The pension fund does not have full information with regard to the condition of the employee’s health and therefore cannot make a good estimation with regard to her life expectancy. The pension funds are concerned about the possibility of a market failure called ‘adverse selection’: insuring only the non-profitable employees (those who will live long and receive benefits for many years, or alternatively those who will become disabled at a very early stage and be eligible for disability benefits).40 Not only do pension funds lack knowledge regarding their members (or potential members). The insured themselves often do not know much about their pension funds or pension rights.41 In the UK, for example, a survey found that 6 in 10 did not know that delaying taking their state pension could increase it by as much as 10%.42 There are several reasons for this lack of knowledge. First, pension plans are complicated. People lack (or think they lack) the economic and mathematical tools that may be needed to properly understand the plans.43 Second, people suffer from myopia and are unable to imagine who they will be 35 years in the future.44 They cannot imagine what that person will want or need. Third, people sometimes suffer from an optimism bias and tend to believe they will need less money in retirement than proves to be the case. Alternatively, some people suffer from a pessimism bias, which results in over-saving.45 Fourth, people associate pensions with sickness and death and therefore try to avoid thinking about them. These behavioural failures prevent employees from overseeing their pension funds and switching to better ones. Due to their lack of knowledge, people often do not compare their pension plan to other pension plans and do not switch between pension plans. Therefore, managers of pension funds do not have a strong incentive to offer low prices (low management fees), provide good service or make good investments. States make certain efforts to provide knowledge to their citizens with regard to their pension plans.46 Nonetheless, these efforts are limited. Opponents of privately managed pension funds point also to the high agency costs of privately managed pensions.47 One type of agency cost is the cost of providing strict regulation. Another is the higher administrative costs, once a certain service is provided by a private entity. Several countries that have mandatory private pensions have capped the management fees that pension funds may charge.48 Restrictions on management fees are important to ensure that members in pension funds will receive an adequate pension. Nonetheless, there is evidence that charge ceilings can also become de facto floors.49 Moreover, a low ceiling might prevent new pension funds from entering the market, thereby restricting competition in the pension market. 4.  PRIVATE PENSIONS IN ISRAEL Israel’s regulators adopted the World Bank recommendations from 1994 at a relatively early stage, and therefore, the case study of Israel makes possible an evaluation of the recommendations from a 20-year perspective. In 1995 Israel closed all DB pension funds to new employees. Since 2008, joining a privately managed DC pension fund has been mandatory in Israel. Currently, the Israeli pension system consists of three pillars: a first universal public pillar, a second occupational pension pillar, and a third pillar of private savings.50 In terms of the first pillar, all residents of Israel are entitled to a basic public pension (unrelated to work status) from the National Insurance Institute.51 The sum of the benefits—equivalent to approximately $380 a month—is low compared to OECD countries and not enough by itself to provide an adequate income after retirement.52 Therefore, the second pillar plays an important role in providing income security for Israeli retirees. The second pillar of Israel’s pension system includes several types of pension arrangements, including DB pension plans (which are now closed to new members) and DC pension plans.53 The case study of Israel, therefore, makes possible a comparison between DB plans and DC plans (only DC plans are open to new members in Israel). Moreover, the second pillar of Israel’s pension system includes DB plans that are managed by the state and DC and DB plans that are managed by private insurance companies. The case study of Israel, therefore, makes possible a comparison between DB pension arrangements that are managed by the state and DB pension funds that are managed through private entities. Lastly, Israel’s pension system serves as an interesting case study because the occupational pension is mandatory. 5.  METHODOLOGY The current empirical research consists of a study of all Israeli pension funds’ bylaws—38 bylaws in total. Eight of these are bylaws of DB pension funds managed by the state, and the rest (30) are bylaws of pension funds managed by private non-state entities (such as insurance companies and investment firms). The research also includes the provisions of the Civil Service Law (Pensions) of 1959, which regulates the Israeli civil service budgetary pension (a huge DB plan managed by the state). Of the 30 bylaws managed by these private pension funds, 10 pertain to DB pension funds managed by private entities and the rest (20) to DC pension funds managed by private entities.54 This research focuses on the main clusters of provisions in the bylaws and in the Civil Service Law. The first cluster is composed of provisions regarding the calculation of pension rights. These provisions define the calculation methods of pension rights in each pension fund. The second cluster is composed of provisions regarding management fees. These provisions determine the management fee ceiling. The third cluster is composed of provisions regarding the terms of eligibility for insurance. These provisions define who is eligible to join a pension fund and who is not. The research also includes financial reports of the funds (which include data on the actual management fees the funds exact from savers), ministerial data regarding returns to investments and Central Bureau of Statistics data. 6.  FINDINGS A.  DC Schemes Entail High Risks to Savers The study of bylaws in Israel shows that, indeed, DC schemes entail much higher risks to savers than DB schemes. In most DB schemes, each year participants acquire 2% of earnings as pension rights. A worker with a 35-year history would receive 70% of her last salary or of her average wage (depending on the specific scheme). In DC schemes, the bylaws define only the monthly contributions to the funds. Savers, therefore, do not (and cannot) know the sum they will receive from the fund. The sum of the annuity in DC schemes in Israel is determined by several factors (according to the bylaws). First, the sum of the annuity depends on the sum of the savings (the sum of all monthly contributions to the fund over the years). In order to receive a decent pension, employees need to work for many years and earn a decent salary. Second, the fund exacts management fees which are deducted from the savings. The higher the management fees, the lower the pension will be. Third, savings are invested in the capital market. The annuity depends, therefore, on capital market returns. Fourth, once an employee retires from work, the fund divides all savings by the number of months which she is expected to live and receive benefits (conversion factor). Funds change their bylaws (and the conversion factors) frequently based on changes in life expectancy. None of the factors described above is under the employee’s control. First, the employee cannot control (by herself) the number of years she will work or the salaries she will receive. Even if a worker plans to contribute large sums of money to pension savings during her working years, she might become unemployed or disabled. Second, savers can’t fully control the management fees they pay to the fund (especially savers without negotiating power). Third, savers obviously cannot control the capital market and its returns. Fourth, savers cannot control the average life expectancy of people in their country. Empirical data from Israel highlight the many risks which DC schemes shift onto employees: (i)  Risks Regarding Labour Market Transitions Labour market transitions include unemployment and taking care of family members.55 Workers in Israel (as elsewhere) face unemployment periods and periods when they take care of family members. Israeli employees are, generally, not covered by DC schemes during these periods (the period of maternity leave is an exception). The longer these periods are the smaller the employee’s pension will be.56 (ii)  Risks Regarding Management Fees DC pension funds reveal in their financial reports the huge differences between the management fees they collect from members who work in large workplaces and the management fees they collect from other members. While the ‘strongest’ employees pay minimal management fees, which are close to zero, the ‘weakest’ employees pay the maximum fees. In the financial reports, the funds disclose that they provide special discounts for employees who work in large workplaces and who consequently pay much lower fees than unorganised workers who work in small workplaces (Tables 1 and 2). Moreover, Israel’s major employee union (the Histadrut) reveals in its publications the low management fees that it manages to secure for employees in major workplaces through contracts with private pension funds (Table 2). Table 1. Management Fees for Organised Workers and Workers in Large Workplaces   Maximum Management Fees (%)  Average Management Fees (%)  Management Fees for Employees in Five Major Workplaces (%)  Management Fees for Workers in the Civil Service (Employee Union Agreement with a Pension Fund) (%)  Annual management fees  0.5  0.28  0.21  0.045  Monthly management fees  6  3.17  2.01  0.45    Maximum Management Fees (%)  Average Management Fees (%)  Management Fees for Employees in Five Major Workplaces (%)  Management Fees for Workers in the Civil Service (Employee Union Agreement with a Pension Fund) (%)  Annual management fees  0.5  0.28  0.21  0.045  Monthly management fees  6  3.17  2.01  0.45  Makefet Financial Report (2013). Available at https://www.migdal.co.il/He/MigdalMakefet/Solutions/Documents/FinancialReports/2013/migdalmakefet_2013.pdf (date last accessed 25 July 2017). Pensia-Net Website. Available at http://pensyanet.cma.gov.il/ (date last accessed 25 July 2017); Histadrut’s Website: http://hahistadrut.org.il/files/Forms/news/minhelet-hagimlaot6.2015.pdf (date last accessed 25 July 2017). View Large Table 1. Management Fees for Organised Workers and Workers in Large Workplaces   Maximum Management Fees (%)  Average Management Fees (%)  Management Fees for Employees in Five Major Workplaces (%)  Management Fees for Workers in the Civil Service (Employee Union Agreement with a Pension Fund) (%)  Annual management fees  0.5  0.28  0.21  0.045  Monthly management fees  6  3.17  2.01  0.45    Maximum Management Fees (%)  Average Management Fees (%)  Management Fees for Employees in Five Major Workplaces (%)  Management Fees for Workers in the Civil Service (Employee Union Agreement with a Pension Fund) (%)  Annual management fees  0.5  0.28  0.21  0.045  Monthly management fees  6  3.17  2.01  0.45  Makefet Financial Report (2013). Available at https://www.migdal.co.il/He/MigdalMakefet/Solutions/Documents/FinancialReports/2013/migdalmakefet_2013.pdf (date last accessed 25 July 2017). Pensia-Net Website. Available at http://pensyanet.cma.gov.il/ (date last accessed 25 July 2017); Histadrut’s Website: http://hahistadrut.org.il/files/Forms/news/minhelet-hagimlaot6.2015.pdf (date last accessed 25 July 2017). View Large Table 2. Makefet Pension Fund: Number of Members According to Percentage Management Fees   Monthly Management Fees  Annual Management Fees  0–1.5%  1.5–3%  3–4.5%  4.5–6%  0–0.15%  2,261  2,645  7,340  709  0.15–0.25%  68,821  110,199  53,784  7,795  0.25–0.4%  4,746  2,038  11,999  1,832  0.4–0.5%  312,058  5,167  13,469  152,929    Monthly Management Fees  Annual Management Fees  0–1.5%  1.5–3%  3–4.5%  4.5–6%  0–0.15%  2,261  2,645  7,340  709  0.15–0.25%  68,821  110,199  53,784  7,795  0.25–0.4%  4,746  2,038  11,999  1,832  0.4–0.5%  312,058  5,167  13,469  152,929  Makefet Pension Fund Financial Report (2013) Available at https://www.migdal.co.il/He/MigdalMakefet/Solutions/Documents/FinancialReports/2013/migdalmakefet_2013.pdf (date last accessed 25 July 2017). View Large Table 2. Makefet Pension Fund: Number of Members According to Percentage Management Fees   Monthly Management Fees  Annual Management Fees  0–1.5%  1.5–3%  3–4.5%  4.5–6%  0–0.15%  2,261  2,645  7,340  709  0.15–0.25%  68,821  110,199  53,784  7,795  0.25–0.4%  4,746  2,038  11,999  1,832  0.4–0.5%  312,058  5,167  13,469  152,929    Monthly Management Fees  Annual Management Fees  0–1.5%  1.5–3%  3–4.5%  4.5–6%  0–0.15%  2,261  2,645  7,340  709  0.15–0.25%  68,821  110,199  53,784  7,795  0.25–0.4%  4,746  2,038  11,999  1,832  0.4–0.5%  312,058  5,167  13,469  152,929  Makefet Pension Fund Financial Report (2013) Available at https://www.migdal.co.il/He/MigdalMakefet/Solutions/Documents/FinancialReports/2013/migdalmakefet_2013.pdf (date last accessed 25 July 2017). View Large (iii)  Risks Regarding Capital Market Returns In Israeli DC schemes, all risks and costs regarding capital market returns are on the employees. The Israeli Ministry of Finance data show that in years of economic crisis (such as 2008), savers lose large sums from their pensions.57 (iv)  Risks Regarding Life Expectancy Life expectancy is on the rise in Israel as in all industrialised countries. In 1971, life expectancy at birth was 71.8; in 1991, it was 76.8; in 2014, it was 82.2.58 As life expectancy rises, DC pension funds reduce pension benefits (by increasing the annuity conversion factors). B.  Publicly Managed (DB) Plans Charge Lower Management Fees than Privately Managed Plans (DB and DC) According to the findings, management fees in (DB) pension funds managed by the state are much lower than management fees in (DB and DC) pension funds managed by private entities. In all (DB) pension funds managed by the state, the management fees are close to zero and include only operating fees (Table 3). Table 3. Management Fees   Publicly Managed DB Plan (for Civil Service Employees) (1)  Publicly Managed DB Plan (8)  Privately Managed DB (10)  Privately Managed DC (All-Inclusive) (10 Funds)  Privately Managed DC (Supplemental) (10 Funds)  Monthly feesa  0  Only operating fees  60% of the funds—above 7%  6%  4%  Annual feesb  0    60% of the funds—above 0.6%  0.5%  1.05%  Fees from pensioners  0    70% of the funds—above 0.6%  0.5%  0.5%    Publicly Managed DB Plan (for Civil Service Employees) (1)  Publicly Managed DB Plan (8)  Privately Managed DB (10)  Privately Managed DC (All-Inclusive) (10 Funds)  Privately Managed DC (Supplemental) (10 Funds)  Monthly feesa  0  Only operating fees  60% of the funds—above 7%  6%  4%  Annual feesb  0    60% of the funds—above 0.6%  0.5%  1.05%  Fees from pensioners  0    70% of the funds—above 0.6%  0.5%  0.5%  aCalculated as a percentage of the monthly deductions to the fund. bCalculated as a percentage of the total value of the fund. View Large Table 3. Management Fees   Publicly Managed DB Plan (for Civil Service Employees) (1)  Publicly Managed DB Plan (8)  Privately Managed DB (10)  Privately Managed DC (All-Inclusive) (10 Funds)  Privately Managed DC (Supplemental) (10 Funds)  Monthly feesa  0  Only operating fees  60% of the funds—above 7%  6%  4%  Annual feesb  0    60% of the funds—above 0.6%  0.5%  1.05%  Fees from pensioners  0    70% of the funds—above 0.6%  0.5%  0.5%    Publicly Managed DB Plan (for Civil Service Employees) (1)  Publicly Managed DB Plan (8)  Privately Managed DB (10)  Privately Managed DC (All-Inclusive) (10 Funds)  Privately Managed DC (Supplemental) (10 Funds)  Monthly feesa  0  Only operating fees  60% of the funds—above 7%  6%  4%  Annual feesb  0    60% of the funds—above 0.6%  0.5%  1.05%  Fees from pensioners  0    70% of the funds—above 0.6%  0.5%  0.5%  aCalculated as a percentage of the monthly deductions to the fund. bCalculated as a percentage of the total value of the fund. View Large Moreover, the findings also show that private DB schemes charge higher management fees than private DC schemes. In all private DC schemes (all-inclusive and supplemental), the bylaws enable the fund to collect from its members the maximum management fees allowed by law. With regard to private DB schemes, no regulation regarding management fees exists aside from Finance Ministry circulars. Here, the differences between the funds are immense. Moreover, 30% of the pension funds do not publish the management fees they collect from members and pensioners, but 70% of the pension funds do. C.  Public Schemes Provide More Information to Members Than Private Schemes The findings show that public (DB) schemes tend to provide more information to members than private (DB and DC) schemes. Between the private schemes, the findings show that private schemes that are open to new members and to competition (DC schemes) provide much more information to members than private schemes that are not open to competition (DB schemes). As shown in Table 4, several pension funds did not publish in their bylaws the annuity conversion factor of their members. Other pension funds published only partial data regarding the conversion factor. Three pension funds (all of them private DB) did not publish in their bylaws the maximum amount of management fees. One bylaw excludes ‘certain professions’ from membership, without actually specifying those professions. Table 4. Providing Information to Members in the Pension Funds Bylaws   Publicly Managed DB Plan (for Civil Service Employees) (1)  Publicly Managed DB Plan (8)  Privately Managed DB (10)  Privately Managed DC (All-Inclusive) (10 Funds)  Privately managed DC (Supplemental) (10 Funds)  The bylaw is published on the fund website  100%  100%  90%  100% 3/10; 1 not published at all)  100% 2/10, 1 not published at all)  Annuity conversion factor is published  100%  100%  Only 50% of the funds published the conversion factor  Only 70% of the funds published full data about conversion factors  Only 80% of the funds published full data about conversion factors  Management fees are published  100%  100%  70%  100%  100%    Publicly Managed DB Plan (for Civil Service Employees) (1)  Publicly Managed DB Plan (8)  Privately Managed DB (10)  Privately Managed DC (All-Inclusive) (10 Funds)  Privately managed DC (Supplemental) (10 Funds)  The bylaw is published on the fund website  100%  100%  90%  100% 3/10; 1 not published at all)  100% 2/10, 1 not published at all)  Annuity conversion factor is published  100%  100%  Only 50% of the funds published the conversion factor  Only 70% of the funds published full data about conversion factors  Only 80% of the funds published full data about conversion factors  Management fees are published  100%  100%  70%  100%  100%  View Large Table 4. Providing Information to Members in the Pension Funds Bylaws   Publicly Managed DB Plan (for Civil Service Employees) (1)  Publicly Managed DB Plan (8)  Privately Managed DB (10)  Privately Managed DC (All-Inclusive) (10 Funds)  Privately managed DC (Supplemental) (10 Funds)  The bylaw is published on the fund website  100%  100%  90%  100% 3/10; 1 not published at all)  100% 2/10, 1 not published at all)  Annuity conversion factor is published  100%  100%  Only 50% of the funds published the conversion factor  Only 70% of the funds published full data about conversion factors  Only 80% of the funds published full data about conversion factors  Management fees are published  100%  100%  70%  100%  100%    Publicly Managed DB Plan (for Civil Service Employees) (1)  Publicly Managed DB Plan (8)  Privately Managed DB (10)  Privately Managed DC (All-Inclusive) (10 Funds)  Privately managed DC (Supplemental) (10 Funds)  The bylaw is published on the fund website  100%  100%  90%  100% 3/10; 1 not published at all)  100% 2/10, 1 not published at all)  Annuity conversion factor is published  100%  100%  Only 50% of the funds published the conversion factor  Only 70% of the funds published full data about conversion factors  Only 80% of the funds published full data about conversion factors  Management fees are published  100%  100%  70%  100%  100%  View Large D.  The Combination of Privately Managed Pensions and DC Schemes Leads to Inequality (i)  Inequality in the Admission Process The research shows that privately managed DC schemes contain eligibility terms and that the admission process to the funds is highly restrictive (Table 5). Not all employees can join the funds. First, most privately managed DC funds declare that a candidate may become a member of the fund only if the fund approves her membership. Second, all privately managed DC bylaws contain a provision that enables the fund to conduct a medical underwriting for the candidate’s membership. Based on the medical underwriting, the fund may approve or deny membership. Third, several bylaws declare that the fund may deny membership based on economic conditions. Fourth, while all bylaws enable pension funds to deny candidates membership, several bylaws declare explicitly that a pension fund may deny membership ‘for any reason whatsoever’. Fifth, one bylaw declares that ‘employees who work in certain professions will not be approved as members … The list of denied professions appears in appendix x.’ However, the pension fund did not add Appendix x (or any other appendix) to its bylaws. Sixth, many bylaws contain age restrictions, and only candidates aged 18 and older may apply to these funds. Table 5. Eligibility Terms for Insurance   Publicly Managed DB Plan (for Civil Service Employees) (1)  Publicly Managed DB Plan (8)  Privately Managed DB (10)  Privately Managed DC (All-INCLUSIVE) (10 Funds)  Privately Managed DC (Supplemental) (10 Funds)  Open to new members  No  No  No  Yes  Yes  Age limitation    No  30% (age 18 or 20)  40% (age 18)  10% (age 18)  Medical underwriting    0  0  100% (10/10)  50% (5/10)  Refusal due to economic factors    0  0  50% (2 for economic reasons, 3 for any reason)  30% (2 for economic reasons, 1 for any reason)  A right to refuse for any reason    0  0  30% (3/10)  10% (1/10)  A right to refuse to insure specific professions  No  0  0  10% (1/10)  0    Publicly Managed DB Plan (for Civil Service Employees) (1)  Publicly Managed DB Plan (8)  Privately Managed DB (10)  Privately Managed DC (All-INCLUSIVE) (10 Funds)  Privately Managed DC (Supplemental) (10 Funds)  Open to new members  No  No  No  Yes  Yes  Age limitation    No  30% (age 18 or 20)  40% (age 18)  10% (age 18)  Medical underwriting    0  0  100% (10/10)  50% (5/10)  Refusal due to economic factors    0  0  50% (2 for economic reasons, 3 for any reason)  30% (2 for economic reasons, 1 for any reason)  A right to refuse for any reason    0  0  30% (3/10)  10% (1/10)  A right to refuse to insure specific professions  No  0  0  10% (1/10)  0  View Large Table 5. Eligibility Terms for Insurance   Publicly Managed DB Plan (for Civil Service Employees) (1)  Publicly Managed DB Plan (8)  Privately Managed DB (10)  Privately Managed DC (All-INCLUSIVE) (10 Funds)  Privately Managed DC (Supplemental) (10 Funds)  Open to new members  No  No  No  Yes  Yes  Age limitation    No  30% (age 18 or 20)  40% (age 18)  10% (age 18)  Medical underwriting    0  0  100% (10/10)  50% (5/10)  Refusal due to economic factors    0  0  50% (2 for economic reasons, 3 for any reason)  30% (2 for economic reasons, 1 for any reason)  A right to refuse for any reason    0  0  30% (3/10)  10% (1/10)  A right to refuse to insure specific professions  No  0  0  10% (1/10)  0    Publicly Managed DB Plan (for Civil Service Employees) (1)  Publicly Managed DB Plan (8)  Privately Managed DB (10)  Privately Managed DC (All-INCLUSIVE) (10 Funds)  Privately Managed DC (Supplemental) (10 Funds)  Open to new members  No  No  No  Yes  Yes  Age limitation    No  30% (age 18 or 20)  40% (age 18)  10% (age 18)  Medical underwriting    0  0  100% (10/10)  50% (5/10)  Refusal due to economic factors    0  0  50% (2 for economic reasons, 3 for any reason)  30% (2 for economic reasons, 1 for any reason)  A right to refuse for any reason    0  0  30% (3/10)  10% (1/10)  A right to refuse to insure specific professions  No  0  0  10% (1/10)  0  View Large The Israeli Central Bureau of Statistics data show that, indeed, although there is mandatory pension in Israel, only 82% of all employees are insured.59 Those that are not insured are the most vulnerable workers.60 NGO reports show that the groups which suffer most from the admission process are workers with disabilities, elderly workers, overweight workers and foreign workers.61 (ii)  Gender Inequality Moreover, privately managed (DC) schemes provide unequal benefits on a gender basis. As shown in Table 6, all privately managed DC funds provide lower pension rights to women then to men. Due to women’s lower mortality, all funds set and use a higher annuity conversion factor for women, which results in lower annuities to women than to men. Table 6. Annuity Conversion Factorsa in Privately Managed DC Funds (the Higher the Annuity Conversion Factor, the Lower the Pension Will Be) Pension Fundsa  A  B  C  D  E  F  G  H  I  J  Male Year of Birth: 1990 Retirement age: 60  200.33  205.13  205.13  NP*  NP  205.13  205.13  NP  NP  NP  Female Year of Birth: 1990 Retirement Age: 60  216.86  219.15  219.15  NP  NP  219.15  219.15  NP  NP  NP  Male Year of Birth: 1960 Retirement Age: 67  163.75  167.14  167.14  NP  167.16  167.14  167.14  NP  NP  NP  Female Year of Birth: 1960 Retirement Age: 67  181.14  182.35  182.35  NP  182.36  182.35  182.35  NP  NP  NP  Pension Fundsa  A  B  C  D  E  F  G  H  I  J  Male Year of Birth: 1990 Retirement age: 60  200.33  205.13  205.13  NP*  NP  205.13  205.13  NP  NP  NP  Female Year of Birth: 1990 Retirement Age: 60  216.86  219.15  219.15  NP  NP  219.15  219.15  NP  NP  NP  Male Year of Birth: 1960 Retirement Age: 67  163.75  167.14  167.14  NP  167.16  167.14  167.14  NP  NP  NP  Female Year of Birth: 1960 Retirement Age: 67  181.14  182.35  182.35  NP  182.36  182.35  182.35  NP  NP  NP  NP, not published. aAn annuity conversion factor is a number that is used to convert the annuitant pension savings to a monthly benefit. The conversion factor is based on factors such as mortality of the annuitant. aA–J are the 10 all-inclusive new pension funds. View Large Table 6. Annuity Conversion Factorsa in Privately Managed DC Funds (the Higher the Annuity Conversion Factor, the Lower the Pension Will Be) Pension Fundsa  A  B  C  D  E  F  G  H  I  J  Male Year of Birth: 1990 Retirement age: 60  200.33  205.13  205.13  NP*  NP  205.13  205.13  NP  NP  NP  Female Year of Birth: 1990 Retirement Age: 60  216.86  219.15  219.15  NP  NP  219.15  219.15  NP  NP  NP  Male Year of Birth: 1960 Retirement Age: 67  163.75  167.14  167.14  NP  167.16  167.14  167.14  NP  NP  NP  Female Year of Birth: 1960 Retirement Age: 67  181.14  182.35  182.35  NP  182.36  182.35  182.35  NP  NP  NP  Pension Fundsa  A  B  C  D  E  F  G  H  I  J  Male Year of Birth: 1990 Retirement age: 60  200.33  205.13  205.13  NP*  NP  205.13  205.13  NP  NP  NP  Female Year of Birth: 1990 Retirement Age: 60  216.86  219.15  219.15  NP  NP  219.15  219.15  NP  NP  NP  Male Year of Birth: 1960 Retirement Age: 67  163.75  167.14  167.14  NP  167.16  167.14  167.14  NP  NP  NP  Female Year of Birth: 1960 Retirement Age: 67  181.14  182.35  182.35  NP  182.36  182.35  182.35  NP  NP  NP  NP, not published. aAn annuity conversion factor is a number that is used to convert the annuitant pension savings to a monthly benefit. The conversion factor is based on factors such as mortality of the annuitant. aA–J are the 10 all-inclusive new pension funds. View Large 7.  DISCUSSION A.  The shift of Pension Provision From DB to DC Entails a Significant Shift of Risk From Capital to Labour The research shows that DC plans do indeed impose risks and costs on savers (ie, employees). Pension systems differ from one another in the ways they allocate risks between the employees, the employer, the state and the pension fund. The risks include investment risk, individual mortality risk, cohort mortality risk, salary risk and job tenure risk.62 The findings show that participants do indeed bear the brunt of risk in DC plans, whereas in traditional DB plans, sponsoring employers assume most of the risks.63 While the shift from DB to DC plans was supposed to reduce risks and costs for the state and the employers, this is being accomplished at the employees’ expense, increasing their risks.64 Moreover, the findings show that these costs are very high. B.  Separately From the DB to DC Shift, Moving From Public Management to Private Management Is also an Opportunity for a Similar Shift of Risk The findings bolster the assumption that privately managed pension funds shift costs from the state and the employers to the employees.65 The shift from state-managed DB pensions to privately managed DC pensions in Israel, as in other countries, was due (among other reasons) to economic and actuarial concerns, the aim being to lower costs for the state and ensure the funds’ stability. Nonetheless, this study shows that private pensions do not save costs; rather, they just transfer the costs from the state and the employers to the employees. In fact, the findings show that privately managed pension funds impose heavy costs on the employees and might in the future impose costs on the state. Pension benefits in privately managed funds are much lower than pension benefits in publicly managed funds. This is true not only when we compare publicly managed DB plans to privately managed DC plans but also when we compare publicly managed DB plans to privately managed DB plans. Moreover, management fees in privately managed (DB and DC) funds are significantly higher than in publicly managed funds. The high management fees reduce the benefits of the members. The literature provides several explanations for the above findings, the most prominent being ‘economies of scale’ and the idea of a ‘rational utility-optimising individual’. According to the ‘economies of scale’ literature, large pension funds are able to manage employees’ savings more efficiently and at reduced costs, as compared to smaller funds.66 In Israel, the public management of the funds enjoys the advantage of ‘economies of scale’. According to the idea of a ‘rational utility-optimising individual’. owners of private funds will seek ways to increase their profits by charging high management fees (as well as making the fund more efficient). In contrast, managers of public pension funds do not have the same incentives.67 C.  The Shifts From DB to DC and From Public to Private Management Involve a Shift in Governance, Which Exposes Pension Scheme Members to a High Likelihood of Lower Returns as well as Entrenching Gender and income Inequalities The findings bolster the assumption that privately managed pension funds increase inequality between employees.68 They show that managers of a private pension fund attempt to utilise its profit by providing better services, benefits and fees to attract more ‘profitable customers’, such as employees who work in large or unionised workplaces. As a result, the weakest employees might pay higher management fees and receive lower benefits. (i)  Inequality in Management Fees All the bylaws of privately managed funds define the maximum amount of management fees that the fund may collect from its members. Funds commit in their bylaws not to collect higher management fees than the defined ceiling. However, they do not require all members to pay the highest amount of management fees. In fact, the funds provide substantial management fee discounts to workers in large workplaces as well as to unionised workers. The employees who pay the highest management fees are mostly the weakest workers who work in small places and who are not represented by strong employee unions. (ii) Inequality in the Admission Process Inequality also applies to the possibility of joining a pension fund. Not everybody can join the funds. A worker with a disability—even an overweight or elderly worker—might be unable to find a fund that will agree to insure him.69 Pension funds often refuse to insure foreign workers and Palestinian workers.70 All the bylaws of all-inclusive new pension funds and half of the bylaws of supplemental new pension funds declare that a candidate can become a member of the fund only if the fund approves her membership.71 All funds may deny a candidate on the basis of a medical underwriting. However, the funds do not perform a medical underwriting for all candidates. They automatically insure, as a group, without a medical underwriting, organised workers and workers who are employed in large workplaces. Those who are not accepted to the funds are the weakest workers who have a medical problem or a disability—the cleaning lady, the waiter and the babysitter. (iii) Gender Inequality Lastly, the findings lend support to the literature with regard to gender inequality.72 Privately managed DC funds were supposed to be more accommodating of men and women than publicly managed DB funds. In the past, several DB funds even explicitly excluded women.73 While today all funds are open to both women and men, in DC funds women are more exposed than men to salary risks and job tenure risks.74 Moreover, the findings show that Israeli DC funds set and use a much higher annuity conversion factor for women than for men (due to women’s higher life expectancy). As a result, women receive a lower pension annuity than do men. D.  Competition and Regulation: Importance and Limits (i) Competition The findings highlight the importance of competition between privately managed pension funds. They show that privately managed DB funds which are closed to new members and therefore not open to competition provide inferior rights to those provided by privately managed DC funds which are open to new members and to competition: Management fees are much higher in closed funds than in open funds; the bylaws of closed funds convey less information to their members than those of funds that are open to new members. These findings serve as a warning sign to the increasing number of employers and states which are closing DB pension funds to new members without offering any security to the elderly members and pensioners who are ‘locked’ in the fund.75 Nonetheless, the findings also lend support to the literature regarding behavioural biases and lack of knowledge that reduce competition in the pension market.76 In contrast to DB funds, private DC funds are open to new members and to competition. These funds are supposed to facilitate mobility between jobs and between funds. The findings show that in reality competition between DC funds is limited: all bylaws enable the fund to collect from its members the maximum management fees allowed by law; all bylaws restrict eligibility of candidates for membership; and several bylaws set out identical annuity conversion factors. (ii) Regulation The findings lend support to the literature regarding the need for strict regulation in the pension market77 in several ways. First, they highlight the importance of strict regulation of management fees, showing that when there is no regulatory ceiling to pension funds’ management fees – as in the case of the privately managed DB funds – many do not publish the management fees they charge. Moreover, without regulation, several DB funds charge outrageous fees. Second, the findings highlight the importance of a publicly managed DC pension fund, such as the UK’s National Employment Savings Trust (NEST).78 They show that without a publicly managed fund, workers may be unable to find a fund that will insure them. Nonetheless, the findings also highlight the limits of regulation in the pension market, lending support to the literature regarding the high agency costs of privatisation and the limits of regulators in enforcing the law. Israeli law requires funds to provide information to their members in their bylaws regarding pension rights, management fees and eligibility terms.79 Nonetheless, the findings show that private schemes fail to provide adequate information to their members. Moreover, while the findings demonstrate the importance of a management fee ceiling, they also point to its limits, showing that when there is a management fee ceiling—as in the case of privately managed DC funds (all-inclusive and supplemental)—the funds ‘race’ to the ceiling. 8.  CONCLUDING REMARKS The world is aging. People live longer today than they did in the past and have fewer children. The ratio between the working population and retirees is tilting toward the latter. Governments, local municipalities, employees and regulators all around the world are eager to adjust pension systems to the new life expectancy. Many countries have replaced old public DB plans with private DC plans. While the old plans had many flaws, this article has shown that recent pension reforms have gone too far. The current article used new empirical data from Israel, including pension funds’ bylaws, financial reports of the funds and Central Bureau of Statistics data. The findings revealed major differences between DB funds and DC funds as well as between public managed DB funds and private managed DB funds. The article has shown that the shift of pension provision from DB to DC entails a significant shift of risk from capital to labour. Moreover, separately from the DB to DC shift, moving from public management to private management increases employees’ pension risks. Lastly, the paper shows that the combination of the shifts from DB to DC and from public to private management involves a shift in governance, which expose pension scheme members to a high likelihood of lower returns (due to higher management fees, lower benefits and a selective admission process) as well as to gender and income inequalities. In the new pension regime, not all employees lose. Private managed DC pension funds provide substantial benefits to organized workers who work in large firms. These workers pay low management fees and do not have to pass medical underwriting. The weakest employees are the ones who bear the high price of pension privatization. Footnotes 1 OECD, Pension at a Glance 2015 (2015) 368–371. 2 Office of National Statistics, Statistical Bulletin, Occupational Pension Schemes Survey, 2014 (2015). Available at http://www.ons.gov.uk/ons/dcp171778_417405.pdf (date last accessed 25 July 2017). 3 OECD, Pension at a Glance 2015 (2015); R. Holzmann, Global Pension Systems and Their Reform: Worldwide Drivers, Trends and Challenges (Washington, DC: The World Bank, 2012). 4 While the first pillar exists in all countries, its structure and value vary considerably between countries. OECD, Pension at a Glance (2015) p. 47. 5 OECD, Pension at a Glance: UK (2015). The average value of the first pillar in OECD countries is 22% of the average wage, besides reaching a high of 40% in New Zeland and a low of 6% in Turkey and Korea (Ibid). 6 Pay as You Go plans are unfunded pension plans that are financed directly from contributions from the plan provider. Cf: OECD, Private Pension: OECD Classification and Glossary 2005 (2005). Available at http://www.oecd.org/finance/private-pensions/38356329.pdf (date last accessed 25 July 2017). 7 OECD, Pension at a Glance 2015 (2015) 368–371. 8 Cf: M. A. Orenstein, Privatizing Pensions: The Transnational Campaign for Social Security Reform (Princeton, NJ: Princeton University Press, 2008) 26–28; G. Bonoli, The Politics of Pension Reform: Institutions and Policy Change in Western Europe (Cambridge: Cambridge University Press, 2000); E. Reynaud (ed.), Social Dialogue and Pension Reform (Geneva: International Labour Office, 2000). 9 Cf: E. Whitehouse, Pensions Panorama: Retirement-Income Systems in 53 Countries (Washington, DC: World Bank, 2007). 10 D. Blake, ‘Contracting Out the State Pension System: The British Experience of Carrots and Sticks’ in M. Rein and W. Schmahl (eds), Rethinking the Welfare State – The Political Economy of Pension Reform (Cheltenham: Edward Elgar Publishing, , 2004) 19; R. Minns and R. Martin, ‘Pension Funds in the United Kingdom: Centralization and Control’ in E. Reynaud, L. apRoberts, B. Davis and G. Hughes (eds), International Perspectives on Supplementary Pensions (London: Praeger, 1996) 221; B. Davies, ‘The Structure of Pension Reform in the United Kingdom’ in Emmanuel Reynaud (ed), Social Dialogue and Pension Reform (Geneva: ILO, 2000) 11–24. 11 See OECD, Pension at a Glance 2015 (2015) 368. 12 Cf: see D. Beland, ‘Does Labour Matter? Institutions, Labour Unions and Pension Reform in France and the United States’ (2001) 21 July. Pub. Pol. 155; L. Baccaro, ‘Negotiating the Italian Pension Reform with the Unions: Lessons for Corporatist Theory’(2002) 55 Industrial & Labor Relations Review 413; T. Ghilarducci and P. L. Libana, ‘Unions’ Role in Argentine and Chilean Pension Reform’ 28(4) World Development (2000) 753. Cf: M. Matsaganis, ‘Union Structures and Pension Outcomes in Greece’ (2007) 45(3) British Journal of Industrial Relations 537; G. Bonoli, ‘Pension Politics in France: Patterns of Co-Operation and Conflict in Two Recent Reforms’ (1997) 20(4) West European Politics 111–124. 13 Prominent in the literature dealing with analysis of the decline of the welfare state is the policy feedback or path dependency theory, according to which it is local politics that determines the nature and intensity of the attempts to harm or slash welfare state institutions, and future steps in the field are dependent on the steps of the past. See: P. Pierson, Dismantling the Welfare State? (Cambridge: Cambridge University Press, 1994); P. Pierson, ‘Increasing Returns, Path Dependence, and the Study of Politics’ (2000) 94(2) American Political Science Review 251; M. A. Orenstein, n.8. 14 R. Holzmann, Global Pension Systems and Their Reform: Worldwide Drivers, Trends and Challenges (Washington DC: World Bank, 2012) 2 (Argentina, Hungary Slovakia, Estonia, Latvia and Poland); M. Naczyk and S. Domonkos, ‘The Financial Crisis and Varities of Pension Privatisation Rversals in Eastern Europe’ 29 (2) Governance (2016) 167. 15 World Bank, Averting the Old Age Crisis (New York: OUP, 1994). But see: I. S. Gill, T. Packard and J. Yermo Keeping the Promise of Social Security in Latin America (Washington DC: World Bank, 2004). 16 C. Mesa-Lago, Changing Social Security in Latin America: Toward Alleviating the Social Costs of Economic Reform (Boulder, Colo: Lynne Rienner Pub., 1994); C. Mesa-Lago, ‘Pension Reform Around the World: Comparative Features and Performance of Structural Pension Reforms in Latin America’ (1998) 64 Brooklyn Law Review 771; C. Mesa-Lago, ‘Experiences in the Americas with Social Security Reform: Lessons for Workers and Unions’ in M. Simón Velasco (ed), Social Protection: What Workers Should Know (ILO, Labour Education 2000/4, No. 121(51) 2000). Available at http://www.ilo.org/public/english/protection/socsec/download/labeduce.pdf (date last accessed 25 July 2017); C. Mesa-Lago and K. Muller, ‘The Politics of Pension Reform in Latin America’ (2002) 34 J. Lat. Amer. Stud. 687; J. Pinera, ‘Empowering Workers: The Privatisation of Social Security in Chile’ (1995–1996) 15 Cato Journal 155. 17 OECD, Pensions at a Glance 2015 (2015). 18 C. Sutcliffe, Finance and Occupational Pensions: Theories and International Evidence (UK: Palgrave Macmillan, 2016) 13. 19 OECD, Pensions at a Glance (2013) 341–346; M. Palme, A. Sundén and P. Söderlind, Investment Choice in the Swedish Premium Plan (Center for Retirement Research at Boston College, 2005). 20 R. Holzmann, E. Palmer, D. Robalino, Nonfinancial Defined Contribution Pension Schemes in a Changing Pension World: Volume 1. Progress, Lessons, and Implementation (Washington DC: World Bank, 2012). 21 Adapted from: OECD, Private Pension: OECD Classification and Glossary 2005 (2005) Available at http://www.oecd.org/finance/private-pensions/38356329.pdf (date last accessed 25 July 2017); OECD, Pension at a Glance 2015 (2015); Office of National Statistics, Statistical Bulletin, Occupational Pension Schemes Survey, 2014 (2015) Available at http://www.ons.gov.uk/ons/dcp171778_417405.pdf (Definitions) (date last accessed 25 July 2017). 22 Adapted from: OECD, Private Pension: OECD Classification and Glossary 2005 (2005). Available at http://www.oecd.org/finance/private-pensions/38356329.pdf (date last accessed 25 July 2017); OECD, Pension at a Glance 2015 (2015); Office of Nathional Statistics, Statistical Bulletin, Occupational Pension Schemes Survey, 2014 (2015). Available at http://www.ons.gov.uk/ons/dcp171778_417405.pdf (Definitions) (date last accessed 25 July 2017). 23 See: Office of National Statistics, Statistical Bulletin, Occupational Pension Schemes Survey, 2014 (2015). Available at http://www.ons.gov.uk/ons/dcp171778_417405.pdf (date last accessed 25 July 2017). See also C. Kilpatrick, ‘The New UK Retirement Regime, Employment Law and Pensions’ (2008) 37 ILJ 1, 19–22. 24 T. Randle, P. Heinz Rudolph, Pension Risk and Risk-Based Supervision in Defined Contribution Pension Funds (Washington DC: World Bank, 2014). 25 OECD, Pensions Outlook 2012 (2012) 102–108. Available at http://www.keepeek.com/Digital-Asset-Management/oecd/finance-and-investment/oecd-pensions-outlook-2012_9789264169401-en#page1 (date last accessed 25 July 2017); OECD, Pensions Outlook 2014 (2014) 58–60. Available at http://www.keepeek.com/Digital-Asset-Management/oecd/finance-and-investment/oecd-pensions-outlook-2014_9789264222687-en#page1 (date last accessed 25 July 2017). OECD, Pension at a Glance 2015 (2015) 186. Automatic Enrollment is encouraged by regulation in the USA and Canada (Ibid). 26 L. H. Summers explained the popularity of mandated benefits: ‘As a general proposition, liberals rank alternative strategies in the order of public provision, mandated benefits, then no action for addressing social concerns. Conservatives have exactly the opposite preferences, ranking the alternatives no action, mandated benefits, and then public provision. With these preference patterns, it is little wonder that governments frequently turn to mandated benefits as a tool of social policy.’ (L. H. Summers, ‘Some Simple Economics of Mandated Benefits’ (1999) 79(2) The American Economic Association 177). 27 Two other important pension reforms which are not discussed here are the shift from pay-as-you-go to invested schemes and the shift from group schemes to single employer schemes. 28 In Chile, the privatized pension system was planned already in the early 1980s according to the recommendations of the World Bank and the International Monetary Fund. These international organizations pressured Chile to reform its pension system in line with their recommendations. See: E. Huber and J. D. Stephens, The Political Economy of Pension Reform: Latin America in Comparative Perspectives (Geneva: United Nations Research Institute for Social Development, Occasional Paper No. 7, 2000) 3–5. On international economic organizations’ pressure on European nations to reform their pension systems, see: K. Muller, ‘Latin American and East European Pension Reforms: Accounting for a Paradigm Shift,’ in M. Rein and W. Schmahl (eds), Rethinking the Welfare State: The Political Economy of Pension Reform (Cheltenham: Edward Elgar Publishing, 2004) 372, 380; R. Madrid, ‘The Politics and Economics of Pension Privatisation in Latin America’ (2002) 37(2) Latin American Research Review 159, 166–167. 29 M. A. Orenstein, n.8. 30 International movement of capital consists of insurance corporations and international pension funds that invest the insurees’ funds in various international funds. Both insurance corporations and investment funds are interest groups that have a vested interest in preserving and distributing private pension systems. Cf: M. Naczyk, ‘Agents of Privatization? Buisness Groups and the Rise of Pension Funds in Continental Europe’ (2013) 11 Socio-Economic Review 441. 31 M. A. Orenstein, n.8; N. Draper and E. Westerhout, ‘Privatizing Pensions: More than an Interesting Thought?’ (2012) SSRN Working Paper Series; OECD, Private Pensions Outlook 2008 (2009); OECD, Pensions Outlook 2014 (2014) Available at http://www.keepeek.com/Digital-Asset-Management/oecd/finance-and-investment/oecd-pensions-outlook-2014_9789264222687-en#page1 (date last accessed 25 July 2017). 32 M. A. Orenstein, n.8 at 185–186. 33 M. S. Feldstein ‘Rethinking Social Insurance’ (2005) 95(1) American Economic Review 1. 34 N. Barr and P. Diamond ‘The Economics of Pensions’ (2006) 22(1) Oxford Review of Economic Policy 15, 36–37; M. A. Orenstein, n.8 at 179–181; T. Randle, P. Heinz Rudolph, Pension Risk and Risk-Based Supervision in Defined Contribution Pension Funds (Washington DC: World Bank, 2014). See also A. L. Gustman, O. S. Mitchell and T. L. Steinmeier, ‘The Role of Pensions in the Labor Market: A Survey of the Literature’ (1994) 47(3) Industrial and Labor Relations Review 417, 418 (claiming that benefit levels in DC plans tend to be less generous than DB plans). About social risks, see also: G. Esping Anderson, Social Foundations of PostIndustrial Economics (1999) 40–43; G. Schmid, ‘Towards a Theory of Transitional Labour Markets’ in G. Schmid and B. Gazier (eds), The Dynamics of Full Employment: Social Integration Through Transitional Labour Market (Cheltenham: Edward Elgar Publishing, 2002) 152, 181–182. 35 D. McCarthy, The Optimal Allocation of Pension Risks in the Employment Contract (Department for Work and Pensions, Research Report 272, 2005). 36 A. M. O’Rand and K. M. Shuey, ‘Gender and the Devolution of Pension Risks in the US’ (2015) 55(2) Current Sociology 287. About the shift from DB towards DC, see: OECD, Pensions at a Glance 2015. Available at http://www.keepeek.com/Digital-Asset-Management/oecd/social-issues-migration-health/pensions-at-a-glance-2015_pension_glance-2015-en#page1 (date last accessed 25 July 2017). About the shift from DB towards DC in the UK, see, for example: C. Kilpatrick, ‘The New UK Retirement Regime, Employment Law and Pensions’ (2008) 37 ILJ 1, 19–22. 37 Cf.: K. M. Shuey and A. M. O’Rand, ‘Changing Demographics and New Pension Risks’ (2006) 28 (3) Research on Aging 317 (2006). 38 The high costs are mainly due to means-tested benefits provided by the public system. See: D. Mabbett, ‘The Ghost in the Machine: Pension Risks and Regulatory Responses in the United States and the United Kingdom’ (2002) 40(1) Politics & Society 107, 116. On the risks associated with pension privatisation to individuals and the state, see: J. Geanakoplos, O. S. Mitchell and S. P. Zeldes, ‘Would a Privatized Social Security System Really Pay a Higher Rate of Return?’ (NBER Working Paper No. 6713, 2000). 39 N. Barr and P. Diamond ‘The Economics of Pensions’ (2006) 22(1) Oxford Review of Economic Policy 15, 36–37; M. A. Orenstein, n.8 at 179–181. 40 Cf: V. Bertrand, ‘Mandatory Pensions and the Intensity of Adverse Selection in Life Insurance Markets’ (2003) 70 Journal of Risk and Insurance 527. See also: G. A. Akerlof, ‘The Market for “Lemons”: Quality Uncertainty and the Market Mechanism’ (1970) 84(3) The Quarterly Journal of Economics 488. 41 J. Beshears, J. J. Choi, D. Laibson, B. C. Madrian, ‘Behavioral Economics Perspectives on Public Sector Pension Plans’ (2011) 10 Journal of Pension Economics and Finance 315; A. L. Gustman, T. Steinmeier and N. Tabatabai, ‘Imperfect Knowledge of Plan Type’ (2007) NBER Working Paper No. 13379; S. Chan and A. Huff Stevens, ‘What You Don’t Know Can’t Help You: Worker Knowledge and Retirement Decision-Making’ (2008) 90(2) The Review of Economics and Statistics 253; J. J. Choi, D. Laibson, B. C. Madrian, ‘$100 Bills on the Sidewalk: Suboptimal Investment in 401(k) Plans’ (2011), 93(3) Review of Economics and Statistics 748. 42 S. O’Grady, ‘How our lack of pensions knowledge could cost us thousands of pounds,’ Sunday Express (May 27, 2015). About the lack of knowledge in a DC pension scheme in the UK, see: A. Byrne, ‘Employee Saving and Investment Decisions in Defined Contribution Pension Plans: Survey Evidence from the UK’ (2007) 16 Financial Services Review. 43 Annamaria Lusardi and Olivia S. Mitchell, ‘Financial Literacy and Retirement Preparedness: Evidence and Implications for Financial Education’ (2007) 42(1) Business Economics 35–44. 44 D. M. Weiss, ‘Paternalistic Pension Policy: Psychological Evidence and Economic Theory’ (1991) 58 U. Chi. L. Rev. 1275, 1297–1300. 45 J. D. Wright and D. H. Ginsburg, ‘Behavioral Law and Economics: Its Origins, Fatal Flaws and Implications for Liberty’ (2012) 106(3) Northwestern University Law Review 1044; O. Bar-Gill, ‘Seduction by Plastic’ (2004) 98 NW. U. L. Rev.1375–1376. 46 A. Lusardi and O. S. Mitchell 2007, n.43. 47 O. S. Mitchell, ‘Administrative Costs in Public and Private Retirement Systems’ in Martin Feldstein (ed), Privatizing Social Security (Chicago: University of Chicago Press, 1998) 403; A. Dobrongov and M. Murthi, ‘Administrative Fees and Costs of Mandatory Private Pensions in Transition Economies’ (2005) 4(1) Journal of Pension Economics and Finance 31. About privatisation and agency costs, see: David E. M. Sappington and J. E. Stiglitz, ‘Privatization, Information and Incentives’ (1987) Journal of Policy Analysis and Management 567; D. Maritmort, ‘An Agency Perspective on the Costs and Benefits of Privatisation’ (2006) 30(1) Journal of Regulatory Economics 5; R. J. Gilson and J. N. Gordon, ‘The Agency Costs of Agency Capitalism: Activist Investors and the Revaluation of Governance Rights’ (2011) 113 Columbia Law Review 863. 48 OECD, Private Pensions Outlook2008 (2009) 144. 49 Ibid. 50 In this sense, Israel’s pension system is consistent with the Word Bank recommendations. See Averting the Old Age Crisis. Available at http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/1994/09/01/000009265_3970311123336/Rendered/PDF/multi_page.pdf (date last accessed 25 July 2017). 51 Retirees are entitled to the benefits only when they reach the age of 62 (women) or 67 (men). According to the Retirement Age Law, recommendations by the committee regarding women’s retirement age will be submitted by 2016. See Retirement Age Law 2004, Arts. 3–4; The National Insurance Law (consolidated version) 1995, Art. 245. 52 For the sums of the benefits, see The National Insurance Institute of Israel website. Available at http://www.btl.gov.il/English%20homepage/Pages/default.aspx (date last accessed 25 July 2017). See also OECD Reviews of Labour Market and Social Policies in Israel (OECD Publishing 2010) 188. 53 Israeli schemes are all managed by single firms (and not by managers acting on behalf of several firms in the sector). 54 Ten are All-Inclusive New Pension Funds (which include disability and survivers insurance) and 10 are New General Pension Funds. 55 About labour market transitions see: G. Schmid 2002, n.34. For a discussion about the standard employment relationship see: Z. Adams and S. Deakin, ‘Institutional Solutions to Precariousness and Inequality in Labour Markets’ (2014) 52 British Journal of Industrial Relations 779–809 (Deakin and Adams show that nonstandard and precarious work relationships often complement the standard employment relationship via labour market transitions, and are not displacing it) 56 OECD, Pension at a Glance 2015. 57 In 2008, the average capital returns of DC pension funds in Israel was −11.8. In 2011, it was −1.2. (The Ministry of Finance, Annual Report of the Capital Market, Insurance and Savings Department 2015 [Hebrew]). 58 OECD data, Life Expectency at Birth. Available at https://data.oecd.org/healthstat/life-expectancy-at-birth.htm (date last accessed 25 July 2017). In the UK life expectancy at birth in 1971 was 71.9; in 1991, it was 75.9 and in 2014, it was 81.4 (Ibid). 59 State of Israel, Central Bureau of Statistics, Social Survey 2012 (June 2014) (Hebrew) 24–30. 60 Ibid. 61 E. Aflalo, ‘A Pension Fund - Only if you are Healthy’ (2008) The-Marker [Hebrew].Available at http://www.haaretz.co.il/misc/1.1324876 (date last accessed 25 July 2017). A. Sason and R. Linder, ‘Too Fat? You Won’t Enjoy Pension Benefits’ (2014) The Marker [Hebrew]. Available at http://www.themarker.com/markets/1.2488802 (date last accessed 25 July 2017). Recently several workers with disabilities filed a class action against pension funds that refused to admit them to the fund (Class Action 43232-05-12 from 21 May 2012); A. Adiv, ‘Violating the rights of Palestinian workers in Area C, Israeli firms provide no pension insurance’ (26 January 2014). Available at http://eng.wac-maan.org.il/?p=861 (date last accessed 25 July 2017). 62 See above. 63 OECD, Pension at a Glance 2015. Available at http://www.keepeek.com/Digital-Asset-Management/oecd/social-issues-migration-health/pensions-at-a-glance-2015_pension_glance-2015-en#page1 (date last accessed 25 July 2017). 64 A. M. O’Rand and K. M. Shuey, n.36. 65 N. Barr and P. Diamond, ‘The Economics of Pensions’ (2006) 22(1) Oxford Review of Economic Policy 15, 36–37; D. Mabbett, ‘The Ghost in the Machine: Pension Risks and Regulatory Responses in the United States and the United Kingdom’ (2012) 40(1) Politics & Society 107, 116; K. M. Shuey and A. M. O’Rand, n.37. 66 Scholars have conducted a series of studies (in countries such as the USA, Australia and the Netherlands) with regard to the optimal size of pension funds. The studies show that large pension funds save investment and management costs compared to relatively small pension funds. See: Olivia S. Mitchell and Emily S. Andrews, ‘Scale Economies in Private Multi-Employer Pension Systems’ (1981), 34(4) Industrial and Labor Relations Review 522–530; Helen Higgs and Andrew C Worthington, ‘Economies of Scale and Scope in Australian Superannuation (pension) funds’ (2012), 17 Pensions 252–259; Hazel Bateman and Olivia S. Mitchell, ‘New Evidence on Pension Plan Design and Administrative Expenses: The Australian Experience’ (2004), 3(1) Journal of Pension Economics and Finance 63–76; Jacob Bikker, ‘Is there an Optimal Pension Fund Size? A Scale-Economy Analysis of Administrative and Investment Costs’ (2013), DNB Working Paper 1–35. 67 S. H. Hanke, ‘The Necessity of Property Rights’ 47–53 in S.H. Hanke (ed), Privatisation and Development (San Francisco: Institute for Contemporary Studies Press, 1987). 68 N. Barr and P. Diamond, ‘The Economics of Pensions’ (2006) 22(1) Oxford Review of Economic Policy 15, 36–37; M. A. Orenstein, n.8 at 179–181. 69 E. Aflalo, n.65; A. Sason and R. Linder, n.65. Recently several workers with disabilities filed a class action against pension funds that refused to accept them to the fund (Class Action 43232-05-12 from 21.5.2012). 70 A. Adiv, n.65. 71 The pension funds are concerned with ‘adverse selection.’ For more on adverse selection, see: V. Bertrand, n.40. 72 A. M. O’Rand and K. M. Shuey, n.36; Cf: Kim M. Shuey and Angela M. O’Rand, n.37; S. Deakin and F. Wilkinson, The Law of the Labour Market, Ch. 3 (Oxford: Oxford University Press, 2005). 73 S. Fredman, ‘The Poverty of Equality: Pensions and the ECJ’ (1996) 25 ILJ 91; E. A. Whiteford, Adapting to Change: Occupational Pension Schemes, Women and Migrant Workers: An Examination of the Extent to Which Occupational Pension Schemes in the UK, the Netherlands and Germany Enable Women and Migrant Workers to Accrue Adequate Pensions (The Hague: Springer, 1996); R. Ellison, Pensions: Europe and Equality, 2nd edn (London: Sweet & Maxwell, 1995) 4. 74 K. M. Shuey and A. M. O’Rand, n.37. 75 CF: OECD, Pension at a Glance 2013 (2013) 190. Available at http://www.oecd.org/pensions/public-pensions/OECDPensionsAtAGlance2013.pdf. (date last accessed 25 July 2017); Pension at a Glance 2015 (2015) 188. Available at http://www.keepeek.com/Digital-Asset-Management/oecd/social-issues-migration-health/pensions-at-a-glance-2015_pension_glance-2015-en#page190 (date last accessed 25 July 2017); S. Deakin, ‘The Rise of Finance: What is driving it?, What might stop it? A Comment on “Finance and Labor: Perspectives on Risk, Inequality and Democracy” by Sanford Jacoby (2008–2009) 30 Comp. Lab. L. & Pol’y J 67, 72. 76 A. Lusardi and O. S. Mitchell 2007, n.43; John Beshears, J. J. Choi, D. Laibson, B. C. Madrian 2011, n.41; Alan L. Gustman, Thomas Steinmeier and Nahid Tabatabai, ‘Imperfect Knowledge of Plan Type’ (2007), NBER Working Paper No. 13379; Sewin Chan and Ann Huff Stevens, n.41; J. J. Choi, D. Laibson, B. C. Madrian, n.41. 77 Due to the behavioural biases in the pension market, research emphasises the importance of default rules as well as strict regulation of the pension market. See: R. H. Thaler & S. Benartzi, ‘Save More Tomorrow: Using Behavioral Economics to Increase Employee Saving’ (2004) 112(1) Journal of Public Economy 164; B. C. Madrian and D. F. Shea, ‘The Power of Suggestion: Inertia in 401(k) Participation and Saving Behavior’ (2001) 116(4) Quarterly Journal of Economics 1149; J. J. Choi, D. Laibson, B. Madrian and A. Metrick, ‘For Better Or For Worse: Default Effects and 401(k) Savings Behavior,’ in D. A. Wise (ed), Perspectives in the Economics of Aging (Chicago: The University of Chicago Press, 2004) 81; J. J. Choi, D. Laibson, B. C. Madrian and A. Metrick, ‘Defined Contribution Pensions: Plan Rules, Participant Decisions, and the Path of Least Resistance’ (2002) 16 Tax Policy and the Economy 67. 78 See: NEST website. Available at http://www.nestpensions.org.uk/schemeweb/NestWeb/public/home/contents/homepage.html (date last accessed 25 July 2017). 79 The Control of Financial Services (Provident Funds) Law 2005, Art. 16. 80 Adapted from: OECD, Private Pension: OECD Classification and Glossary 2005 (2005). Available at http://www.oecd.org/finance/private-pensions/38356329.pdf (date last accessed 25 July 2017); OECD, Pension at a Glance 2015 (2015); Office of National Statistics, Statistical Bulletin, Occupational Pension Schemes Survey, 2014 (2015). Available at http://www.ons.gov.uk/ons/dcp171778_417405.pdf (Definitions) (date last accessed 25 July 2017). APPENDIX A: DEFINITIONS80 Annuity conversion factor: A number that is used to convert the annuitant pension savings to a monthly benefit. The conversion factor is based on factors such as mortality of the annuitant. DB pension plans: Occupational pension plans where the rules of the scheme specify the rate of benefits to be paid. Benefits are linked through a formula to members’ wages or salaries, length of employment, or other factors. DC pension plans: Occupational pension plans under which employers and employees pay fixed contributions to the plan. Benefits are determined by the contributions paid, the investment return on those contributions (less charges), and the type of retirement income product purchased upon retirement. Private pension plan: A pension plan administered by an institution other than central government. APPENDIX B: PENSION FUNDS BYLAWS Bylaws of State-Run Veteran Pension Funds The Bylaw of Nativ Veteran Pension Fund The Bylaw of Mivtachim Veteran Pension Fund The Bylaw of the Histadrut’s Veteran Pension Fund The Bylaw of Makefet Veteran Pension Fund The Bylaw of Eged Veteran Pension Fund The Bylaw of Agricultural Workers’ Veteran Pension Fund The Bylaw of Construction Workers’ Veteran Pension Fund The Bylaw of Hadassah’s Veteran Pension Fund Bylaws of Balanced Veteran Pension Funds The Bylaw of Amit Veteran Pension Fund The Bylaw of Yozma Veteran Pension Fund The Bylaw of the Lawyers’ Veteran Pension Fund The Bylaw of Atoodot Veteran Pension Fund The Bylaw of Psagot Veteran Pension Fund The Bylaw of Dan Members’ Veteran Pension Fund The Bylaw of the Jewish Agency of Israel Veteran Pension Fund The Bylaw of Gilad Veteran Pension Fund The Bylaw of Atidit Veteran Pension Fund The Bylaw of Magen Veteran Pension Fund Bylaws of New General Pension Funds The Bylaw of Ayalon Pisga New General Pension Fund The Bylaw of Altshiler Shacham New General Pension Fund The Bylaw of Meitav Dash New General Pension Fund The Bylaw of Helman Aldubi New General Pension Fund The Bylaw of Harel Gilad New General Pension Fund The Bylaw of Phoenix New General Pension Fund The Bylaw of Mivtachim New General Pension Fund The Bylaw of Meitavit New General Pension Fund The Bylaw of Makefet New General Pension Fund The Bylaw of Psagot New General Pension Fund Bylaws of All-Inclusive New Pension Funds The Bylaw of Ayalon Pisga All-Inclusive New Pension Fund The Bylaw of Altshiler Shacham All-Inclusive New Pension Fund The Bylaw of Meitav Dash All-Inclusive New Pension Fund The Bylaw of Helman Aldubi All-Inclusive New Pension Fund The Bylaw of Harel Gilad All-Inclusive New Pension Fund The Bylaw of Phoenix All-Inclusive New Pension Fund The Bylaw of Mivtachim All-Inclusive New Pension Fund The Bylaw of Meitavit All-Inclusive New Pension Fund The Bylaw of Makefet All-Inclusive New Pension Fund The Bylaw of Psagot All-Inclusive New Pension Fund © Industrial Law Society; all rights reserved. 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Industrial Law JournalOxford University Press

Published: Oct 24, 2017

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