A new pension clearinghouse system is good to go, thanks to Ness Technologies, which last week completed the computerized interface, called SwiftNess, which promises to connect employees, employers, banks, the Finance Ministry, and investment houses in a single network. SwiftNess aims to help clean up Israel’s long-standing pension mess, in which large numbers of workers have missed out on getting the money due them at retirement, because they couldn’t find their accounts.
“Tens of thousands” is actually a conservative estimate, according to pension advisor Yaakov Zlotnik, who says that there may be as many as a quarter-million “frozen” pension accounts containing tens of billions of shekels, money that is being held for workers who have never claimed it. “Many of the workers to whom this money belongs left their jobs after working for a short period, and took other jobs” in the years before Israel instituted a law in 2008 that required all workers to be provided with a pension plan, said Zlotnik
“Either the new employer did not offer a pension plan, or the workers mistakenly assumed that the contributions in their new job would be added to their existing plan.” Either way, he said, many workers — especially if they were employed for just a short period of time — simply forgot about their plans, with the money laying untouched for years, if not decades.
In 2010, the Knesset Labor and Welfare Committee decided to authorize the establishment of a pension clearinghouse, and legislation was proposed to establish this clearinghouse under the management of the insurance companies and banks, who were to guarantee that information would be freely shared with all pension holders, agents, and financial advisors. Consumer groups, concerned that banks and insurance companies would make pension holders go through hoops to gain access, demanded that the legislation be adjusted to allow any account holder to get information about their own account directly.
Thus was born the idea of a public database to be run by a third party. Ness Technologies won the tender to be that third party, and design and operate the clearinghouse. They established a subsidiary called SwiftNess, after which the clearinghouse is named, and have recently completed work on the system, which is expected to go live by June.
When the system does come online, officials expect it to be a positive shock to the pension system — and to the economy — when perhaps hundreds of millions of shekels get freed up as pension holders begin to claim what is rightfully theirs. Specific rules on what criteria a pension holder will need to present in order to get information (identity number, years worked, etc.) are still being worked out by the Finance Ministry, but those are technical details, Ministry officials said, adding that they have high hopes for the system’s success.
The process of transferring all accounts to the clearinghouse will take about a year, at which point all Israelis enrolled in any pension plan will be able to access the details of all their accounts online. They will also be able to roll over funds into different accounts, sign up for regular email reports, and withdraw or deposit funds. Workers will also, for the first time, be able to keep an eye on their active pension deposits, conveniently accessing independent confirmation that their employer is actually depositing money in their pension account and not just claiming to do so.
Security will be as exacting and as thorough as an online banking site, officials said, so there is no fear that cyber-thieves will be able to easily steal money or information from the clearinghouse.
“Ness has a distinct advantage in developing information-based solutions, and we have used our extensive knowledge and experience to establish SwiftNess,” said Tzuriel Horin, a senior VP at Ness. “We are working to integrate institutions into the system, and enable them to provide the proper service to their customers, and ensure that they can continue working in the manner they are used to.”