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Nov 9, 2015
Child Allowance savings plan passed in committee
A few months ago, with UTJ demanding, as per coalition agreements, an increase to the child allowances distributed by the State, and the Finance Ministry objecting, a deal was worked out that instead of distributing the increases, which would require a lot of money now, the State would invest the money on behalf of each child and make it available at the age of 18 for withdrawal.
The deal has finally been worked out, and passed in the Finance Committee of the Knesset.
Basically, the State will increase the child allowances, retroactive to May 1, 2015, and will deposit the money - just the increase - into a new savings plan to be created.
One of the nice additional benefits of the new plan is that parents will be able to add money to the account under a "matching" plan - they can deposit up to the same amount the State deposits, and the child will benefit from the same terms.
At 18 years of age, the child will be able to withdraw the money, no questions asked, with the signature of his/her parents. If the child waits until the age of 21 (interest will continue to accrue during this period), he/she won't need the parents signature any longer.
Another benefit of waiting until 21 - upon withdrawal at 18, 500nis will be added by the State to the available monies to cover the taxes. If you wait until 21 to withdraw the money, an additional 500nis will be added, totaling 1000nis.
Money can be withdrawn earlier than 18 by parents only with the written confirmation of a doctor verifying that the child has urgent medical needs requiring the funds.
source: Kikar and Bechadrei
It looks like they put together a good plan and that it will be the kids actually, eventually, benefiting from the money... albeit that the original purpose of the money was to help parents cover expenses for the kids - tuition, food, diapers, clothing, etc. Now [some of] the money will be used instead for weddings, traveling around the world, higher education, buying a car, or whatever. It might go for very good purposes, but it will not be going towards what the original intention of the child allowance was.
.
The deal has finally been worked out, and passed in the Finance Committee of the Knesset.
Basically, the State will increase the child allowances, retroactive to May 1, 2015, and will deposit the money - just the increase - into a new savings plan to be created.
One of the nice additional benefits of the new plan is that parents will be able to add money to the account under a "matching" plan - they can deposit up to the same amount the State deposits, and the child will benefit from the same terms.
At 18 years of age, the child will be able to withdraw the money, no questions asked, with the signature of his/her parents. If the child waits until the age of 21 (interest will continue to accrue during this period), he/she won't need the parents signature any longer.
Another benefit of waiting until 21 - upon withdrawal at 18, 500nis will be added by the State to the available monies to cover the taxes. If you wait until 21 to withdraw the money, an additional 500nis will be added, totaling 1000nis.
Money can be withdrawn earlier than 18 by parents only with the written confirmation of a doctor verifying that the child has urgent medical needs requiring the funds.
source: Kikar and Bechadrei
It looks like they put together a good plan and that it will be the kids actually, eventually, benefiting from the money... albeit that the original purpose of the money was to help parents cover expenses for the kids - tuition, food, diapers, clothing, etc. Now [some of] the money will be used instead for weddings, traveling around the world, higher education, buying a car, or whatever. It might go for very good purposes, but it will not be going towards what the original intention of the child allowance was.
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What you wrote is not correct - the savings will consist of 50 NIS / month, and IN ADDITION there are increases to the amount paid each month, retroactive to May 1.
ReplyDeleteso the increase is going to be greater than originally agreed upon? by 50nis per kid per month? sounds strange that the state would agree to such a larger increase
ReplyDeleteThat is what it says on kikarshabat, and in today's Yated as well.
ReplyDeleteParents, who supposedly need the money for diapers, etc, can match the state's funds with benefits, so the child can go to goa. Or give the money to some RY at age 18 - 21 (mostlikely.)
ReplyDelete