State-subsidized saving accounts for children get underway

The Knesset Finance Committee approved Sunday a National Insurance Institute program to open subsidized savings accounts for Israeli children.

Under the "Saving Plan for Every Child" program, the state will deposit 50 shekels ($13) each month in a special savings account under the child's name until he or she reaches the age of 18. Parents will be able to deposit another 50 shekels per month from the child allowance they receive, if they wish. The state will make the first deposit in January, and will also retroactively deposit for the period between May 2015 to December 2016.

Parents may choose to have the account managed by a special provident fund, where they would be able to choose an investment track, or by a bank, where the account can earn interest. Regardless of the type of account they choose, the state will pay for the operating costs and management fees until the child reaches 21 years of age.

The state will deposit a lump sum of 500 shekels ($130) when the child reaches age 18, at which point the funds can be withdrawn at the request of the parents. If the funds are not withdrawn, the state will deposit another 500 shekels at the age of 21, at which point the recipient can withdraw the funds without the parents' approval.

"I call on all parents to choose from the various savings options and make sure their children are in the plan that is right for them," Finance Minister Moshe Kahlon said on Sunday. "This is yet another step toward bridging the socio-economic disparities in Israel," he continued. "It means the state will guarantee that every child will have at least 20,000 shekels [about $5,200] when they spread their wings."