Most savers in Israel have little idea where their pension money is actually invested. They rely on pension funds, investment houses or insurance companies to make the decisions for them, based on generic models aimed at the “average investor”

But what if you had the ability to choose where your money goes What if you could build a portfolio that reflects your personal views, financial goals and risk tolerance — all while maintaining the full tax advantages of pension savings

This is where a lesser-known yet highly flexible financial tool comes in: the IRA – an Individual Retirement Account that allows you to manage your long-term savings with true control

What Is an IRA Account

An IRA is a self-managed pension account that allows you, the saver, to make independent investment decisions with your pension funds. It can include an education fund (Keren Hishtalmut), liquidated severance pay, or an active provident fund

Instead of letting an investment manager choose for you, you decide where your money goes – within a fully legal and regulated structure

The idea is simple: you control the investments – from stocks and bonds to ETFs, traded real estate, and even bank deposits. It’s your long-term savings, tailored to your personal financial DNA

Why It Matters

Full control – you decide how to allocate your assets between equities, bonds, global markets, or cash

Tax advantages – all earnings are exempt from capital gains tax as long as they remain in the account. In many cases, pension withdrawals in retirement may also be tax-free

Maintains pension status – the account remains a pension account under law, with all associated protections and benefits

Which Assets Can You Hold in an IRA

The Israeli IRA framework allows you to invest in a broad range of financial instruments, as long as they meet the criteria set by the Ministry of Finance and the Capital Market Authority

Government and corporate bonds

Israeli and global stocks

Mutual funds and ETFs

Bank deposits (with a bank of your choice)

Publicly traded REITs

Certain alternative assets, subject to regulation

However, there are limitations – you can’t buy a private apartment, take a loan against your IRA, or invest in private companies that are not publicly traded

Key Benefits of the IRA

Strategic flexibility and control – experienced investors can craft a portfolio aligned with their worldview, market understanding and risk profile

Full transparency – no surprises, no hidden fees. Every transaction is recorded and visible to you

Significant tax efficiency – since taxes are deferred, compound growth becomes far more effective over time

Risk management tools – you can hedge currency exposure, adjust asset allocation, or hold cash reserves — things that are harder to do in traditional pension tracks

Challenges You Should Know About

IRA is not for everyone

It requires time, financial knowledge, and personal discipline. If you’re not familiar with the capital markets or portfolio construction, you may be better off with a managed pension plan

There is often a minimum to open an account – many providers require at least 100,000 NIS. There are also account fees and potential trading or advisory costs

Regulations apply – not all investments are allowed. The account must comply with rules set by the Capital Market Authority. Risky, unregulated, or private investments are usually prohibited

Simple Example: Who Might Benefit

Let’s take Ronit, age 45, who works in economics. She has 300,000 NIS in an education fund and feels that her current portfolio doesn’t align with her personal market views. She believes in green energy and US tech stocks

If she moves her fund to an IRA, she can build a portfolio that includes ESG funds, green bonds, and a balanced cash position. She keeps all her pension benefits – while gaining full control over how her long-term savings grow

Is the IRA Right for You

The IRA is not a magic solution, but it is a powerful tool for those who know how to use it wisely. If you have financial knowledge, discipline, and a clear investment outlook – this could be one of the smartest moves you make for your retirement

And if you’re unsure, you can always work with a licensed investment advisor who understands the IRA landscape. With the right guidance, you can create a custom portfolio that works for you – from today until retirement

Final Thought

If you had the option to manage your pension money yourself – in a flexible, transparent, tax-deferred account – would you take it
Or would you rather leave those decisions in someone else’s hands