Summary:
The IDF is cherished by us all, and it would be hard to overstate the importance of it being a powerful, dominant, and high-quality institution.

However, the proposal to retroactively approve and henceforth institutionalize the inflated and extraordinary pension benefits granted to IDF retirees is not expected to either strengthen the IDF nor improve its personnel.

What this proposal does is shower public resources on a group that already enjoys outrageous pension conditions. These resources come at the expense of the IDF’s force buildup in light of current challenges, and imposes a heavy burden on the rest of the public, who will have to pay higher taxes for many years and make do with reduced social services, such as health, education, and welfare.

In 2019, the average military budgetary pension for IDF retirees of the average age of 47 stood at 7.72 million shekels. In-depth calculation (detailed in the appendix) shows that this is 9.23 times higher than for retired civil service retirees, despite both groups enjoying similar salaries during their time of employment. Since no essential changes have been made since 2019, we can assume the disparity is the same today.  

A pension eligibility reform was implemented in the civil service some twenty years ago. Employees who began their work in the civil service after 2001 are no longer eligible for a budgetary pension, but for an accumulative pension instead. The value of the accumulative pension, after deducting the employee’s own pension contributions, is significantly lower than the equivalent budgetary pension. It is difficult to precisely calculate the ratio between net receipts in the different pensions, but it is commonly assumed that the cost to the public of an accumulative pension for a “second-generation” public service employee is about half that of a “first-generation” budgetary pension.

A similar reform was implemented several years later for IDF retirees; however, a ‘bridge’ pension mechanism was devised so that IDF retirees with certain seniority receive a unique budgetary pension from the time of their retirement until the “regular” age of retirement, with the result that a “second generation” IDF retiree receives, for each month of service, a net pension at a value even greater than 9.23 times more than a “second generation” civil service retiree.

The law being promoted in the Knesset is expected to define the model by which the scope of the ‘bridge’ pension will be determined. So far, the Finance and Defense ministries agreed that the maximum age of eligibility for this pension will be 60. However, a conservative estimate shows that even after this reduction, a “second generation” IDF retiree will receive, for each month of service, a net pension at a value 8.95 times higher than a “second generation” public service retiree.

Although there may be some merit to the idea that IDF retirees should receive higher pensions as a reward for valued service and a hook for high human capital, it is very doubtful that the gap need be as high as nine times more than civil servants. Furthermore, surveys show young people enlisting are rarely swayed by the promise of a generous pension at the end of the road. Instead, funds should be directed to differential compensation to be used as targeted incentives for professions and tracks in which there is a shortage or competition with the private sector, to sufficiently attract combat soldiers and young officers who have enticing opportunities in the civilian market.

The current proposal waiting for the Knesset vote, aside from ensuring the continuation of the ‘bridge’ pension, will anchor into law the Chief of Staff’s special pension increases (both retroactively and for future payments), imposing an additional burden on the public rather than reducing scandalously high and unnecessary costs. Moreover, this move will likely lead to eventually granting similar pension benefits to other sectors such as the police force, forcing the public to pay an even steeper economic and social price.

The right thing to do to save the public tens of billions of shekels and strengthen national security in a broader sense by allocating more of the budget to military needs rather than to pensions is:

• A gradual erosion of the inflated “first generation” military pensions, well beyond the currently proposed 3% minor reduction.
• A cancellation or significant reduction of the “second generation” ‘bridge’ pension (by, for example, extending eligibility only to the months served in combat units).

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