Salary is not total compensation
Employee Pension Deductions in Israel
A payslip can show employee pension, employer pension and an employer severance component. Only the employee contribution normally reduces immediate take-home pay.
Guide informationMethodology · Version history
Version2026.07.2
Last checkedJuly 16, 2026
Information typeRegulated guide
Source basisMandatory pension rules and user-specific employment terms
Known limits: Collective agreements, waiting periods and contract terms can differ.
Update policy: Material rule changes and corrections are logged on the version-history page.
| Component | Who funds it? | Immediate effect |
|---|---|---|
| Employee pension | Employee | Reduces net pay; may create tax relief subject to rules and limits |
| Employer pension | Employer | Adds retirement savings without being ordinary cash salary |
| Severance component | Employer | Usually deposited toward severance rights |
| Keren hishtalmut | Employee and/or employer | Separate savings benefit where offered; not universal |
The pensionable salary matters
A job offer may calculate contributions on full gross salary, on the statutory baseline, or on a defined subset of salary. Two offers with the same gross salary can therefore have different total value.
Reference: mandatory pension extension order.