Professional Development Savings Fund

The Keren Hishtalmut, or Professional Development Savings Fund, is a medium-term savings plan available to both employees and self-employed individuals in Israel. It is the only short to mid term investment vehicle that remains completely tax-exempt upon withdrawal, making it one of the most popular and advantageous savings options in the Israeli financial market.

Funds become fully accessible after six years and many savers choose to keep their investments in the fund even after that period, continuing to enjoy tax-free capital gains. Withdrawals can also be made after three years to fund professional training or education.

For salaried employees, contributions are made jointly by the employer and the employee - up to 7.5% by the employer and 2.5% by the employee, based on monthly income.

Key Benefits

• Quick fund transfers between investment tracks within three business days.

• Flexible portfolio diversification, allowing investors to combine multiple investment tracks.

• Freedom to switch portfolios at any time without penalties, enabling savers to respond effectively to market developments.
   

For Self-Employed Individuals
Since 1966, self-employed professionals have also been eligible to open a Keren Hishtalmut and contribute up to 7% of their annual income.

As of 2021, self-employed individuals may contribute up to 18,480 ILS per year, receiving two significant tax advantages:
1. Tax exemption on real capital gains (up to the contribution ceiling) when funds are withdrawn.
2.Tax-deductible contributions of up to 4.5% of annual income, with a maximum tax benefit of 5,562 ILS, based on a 47% marginal tax rate.

To maximize this benefit, self-employed individuals must contribute 7% of their annual income up to a ceiling of 263,000 ILS.

At Astrateg, we offer a wide range of personalized investment tracks, tailored to your financial profile and goals - helping you and your family achieve long-term financial stability and peace of mind.