This is one of those decisions where getting it wrong is expensive. For most new savers a pension fund will be the better fit. But holders of an older managers insurance policy sometimes possess a hidden asset worth millions — a guaranteed conversion coefficient — and giving it up by mistake is among the costliest errors in the field.
What each product is
A pension fund is a mutual product with reciprocal guarantee among members, relatively low management fees, built-in insurance cover, and a variable conversion coefficient.
Managers insurance (bituach menahalim) is an individual policy with an insurance company, generally carrying higher management fees, with cover purchased separately. In older policies the contract terms, including the coefficient, were guaranteed.
Comparison across ten parameters
| # | Parameter | Pension fund | Managers insurance |
|---|---|---|---|
| 1 | Product structure | Mutual (reciprocal guarantee) | Individual policy (contract) |
| 2 | Management fees | Lower | Higher |
| 3 | Conversion coefficient | Variable, usually not guaranteed | Guaranteed in pre-2013 policies |
| 4 | Disability cover | Built in | Purchased separately |
| 5 | Survivors' cover | Built in | Purchased separately |
| 6 | Flexibility to tailor cover | More limited | Higher |
| 7 | Exposure to actuarial changes | Present | Reduced in guaranteed policies |
| 8 | Fee ceiling on accumulation | Up to 0.5% (comprehensive) | Set by regulation or policy |
| 9 | Suitability for a new saver (2026) | Usually preferable | Less common |
| 10 | Complexity of a transfer decision | Moderate | High — requires checking the coefficient |
Management fees — where you pay more
As a general rule a pension fund is cheaper. But you must not decide on fees alone: if a policy carries a guaranteed coefficient, the saving on fees may be trivial next to its value.
The guaranteed conversion coefficient — the hidden asset
Anyone who opened a policy before 2013 may hold a guaranteed conversion coefficient written into the contract. From 2013 the option to guarantee a coefficient in new policies was abolished.
Why this can be worth millions: life expectancy keeps rising, so newly calculated coefficients grow larger and the resulting monthly pension shrinks. A guaranteed coefficient freezes the terms as they were. That difference, multiplied by a large accumulation and across decades of retirement, compounds into hundreds of thousands or even millions of shekels.
Disability and survivors' cover
In a pension fund the cover is built in, funded from contributions, with limited flexibility. In managers insurance it is purchased separately, allowing precise personal tailoring but usually at a higher cost.
When transferring between products, it is essential to confirm continuity of cover and to be wary of fresh underwriting, which can result in exclusions or refusal based on your current health.
When to transfer — and when absolutely not
Consider transferring if the policy postdates 2013, carries no guaranteed coefficient, and has high management fees — or if you are a younger saver with a long horizon.
Do not transfer before checking if the policy is older, generally pre-2013, and may carry a guaranteed coefficient, or if the saver is older and might face fresh underwriting.
The rule is simple: never transfer an older policy without first establishing whether it holds a guaranteed coefficient and what that coefficient is worth.
The information on this page is for educational purposes. Please consult a professional before making financial decisions.
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