Quick Answer: Israeli pension funds (keren pensia), provident funds (kupot gemel), and life insurance policies pay directly to whomever is named on the beneficiary designation form, bypassing the will and the succession order entirely. A foreign heir who is not named on the form will not receive the pension balance regardless of what the will says, unless no valid designation exists, in which case the balance falls into the estate and requires a succession order before the fund will release it. Tax is owed on the payout. A withholding certificate from the Israeli Tax Authority (ITA) must be obtained before the fund distributes, or the fund withholds at the top 47% rate by default.

When a parent or spouse who lived in Israel dies, the overseas family faces a system that works very differently from anything they know. In the United States, Australia, or the United Kingdom, pension savings typically form part of the estate and flow through probate. In Israel they do not. They are contractual assets governed by the Pension Supervision Law 5765-2005 and the terms of each fund, and the beneficiary designation form filed with the fund manager is the only document that decides who receives them.

For overseas families, the pension fund is often the most valuable thing in the Israeli estate, sometimes worth more than the apartment, especially for someone who worked the same job for decades. That money can reach a named beneficiary's account within weeks while the estate drags on for a year or more. But if the wrong person is named, or nobody is, the balance goes nowhere until heirs work through a succession order process they have almost certainly never seen before.

1. Why Israeli Pension Savings Bypass the Estate

A keren pensia is a contract between the fund holder and the pension manager. The beneficiary designation is a term of that contract. When the fund holder dies, the manager pays the designated beneficiary as a contractual obligation, the same way a life insurance policy pays the named beneficiary rather than going to the estate.

Israeli law reinforces this through the Pension Supervision Regulations issued under the Pension Supervision Law 5765-2005, which require every pension fund to maintain a beneficiary designation form and to pay on death according to its terms. The Succession Law 5725-1965 (which governs wills, intestacy, and the succession order process) does not apply to these assets. A will that says "I leave my pension savings to my daughter" has no legal effect on the fund if the beneficiary designation says otherwise.

The Supreme Court has confirmed this on multiple occasions. Whoever is named on the designation form gets the money, regardless of the will's terms or what the family believes the deceased intended.

In Practice — the pension fund regulator: All Israeli pension funds and provident funds are regulated by the Capital Markets, Insurance and Savings Authority (Rashut l'Shuk HaHon, Bituach v'Chisachon — CMISA), part of the Ministry of Finance. CMISA publishes binding circulars that set the procedure for beneficiary claims. Under current CMISA instructions, a pension fund must acknowledge a death benefit claim in writing within 7 business days of receiving a complete claim package, and must pay or formally refuse within 30 calendar days. Any unjustified delay triggers statutory interest on the outstanding balance. If the fund refuses to pay, the heirs may complain to the CMISA Commissioner, whose office can compel payment without the need for court proceedings.

2. The Three Main Types of Israeli Pension Savings

Israeli pension savings come in three main forms, and the claim process differs slightly for each.

The keren pensia meshivat (comprehensive pension fund) is the standard workplace pension, mandatory for almost all employed Israelis since 2008. The employer contributes 6.5% of salary each month, the employee contributes 6%, and the employer pays a separate 8.33% component for severance (pitzuim) under the Section 14 arrangement. On death before age 67, the fund pays a survivor pension to the spouse and dependent children and/or a lump-sum payout of accumulated savings, depending on the fund's rules and the beneficiary designation. This is by far the most common type foreign heirs encounter.

The kupat gemel (provident fund) is an investment-based savings vehicle. Unlike a keren pensia, it pays no ongoing survivor pension; it holds accumulated contributions and returns and pays a lump sum on death to the designated beneficiary or the estate. Kupot gemel are common among the self-employed and employees with savings beyond the mandatory pension.

The bituach minahalim (managers insurance) is an older product that combines a life insurance component with savings and pension. Many employees hired before 2008, when the universal pension mandate did not yet exist, received bituach minahalim rather than a keren pensia. The death benefit covers the insurance component (a lump sum) plus accumulated savings, and the claim goes to the insurance company that issued the policy, which may differ from any current employer.

In Practice — finding all the accounts: Israeli employees routinely change jobs and accumulate multiple separate pension and provident fund accounts across different managers. The ITA's Pension Clearinghouse (machtila lekishnot pensia), operated by the Tax Authority's Pension Department, holds a national registry of all Israeli pension savings by ID number. Heirs who hold a succession order, or an Israeli attorney acting under power of attorney, can submit a centralised query to the machtila and receive a list of every active fund, account number, fund manager, and approximate balance in the deceased's name. The query takes approximately two to four weeks to process. Without it, foreign heirs routinely miss entire accounts — most commonly old kupot gemel from employers from 15 or 20 years earlier.

3. How Beneficiary Designations Work Under Israeli Pension Law

Every Israeli pension fund and provident fund account has a beneficiary designation form (tofes minui munal) that the account holder submits to the fund manager. The form names one or more beneficiaries and the percentage share each receives. The designation can be updated at any time by filing a new form while alive; the most recently dated valid form controls.

The designation is account-specific. A person with a keren pensia from a current employer, a kupat gemel from a prior employer, and an old bituach minahalim policy has a separate beneficiary form for each. Getting one right does not touch the others.

Israeli law also does not automatically revoke a designation on divorce. Under pension regulations, divorce has no effect on a prior designation unless the account holder files a new form. The fund will pay the ex-spouse if they are still named. This is one of the most common problems I see in Israeli estate files: a person divorces, remarries, intends the new spouse to receive the pension, but never updates the form, and the ex-spouse collects the full balance.

There is also no automatic "spouse takes everything" default. If the designation names specific percentages to children from a prior marriage or to a sibling, the surviving spouse gets only what the form says, which may be nothing. Family expectations do not override the paperwork.

4. The Survivor Pension: Monthly Payments After a Pension Holder Dies

Where the deceased held a keren pensia and had not yet reached pensionable age (67 for both men and women in Israel), the pension fund typically provides two distinct death benefits: a survivor pension (kitzba le'shu) paid monthly to the surviving spouse and dependent children, and potentially a lump-sum payout of the accumulated savings component.

The survivor pension is calculated as a percentage of the pension the deceased would have received at retirement, projected forward. The exact percentage depends on the fund's own takanon (constitutional rules) and on the beneficiary's relationship to the deceased. Most Israeli pension funds provide a surviving spouse with between 60% and 100% of the projected pension, payable for the spouse's lifetime. Each dependent child under 21 — or beyond 21 if studying full-time or disabled — receives an additional allowance. The combined total is capped at 100% of the projected pension under most fund rules.

For a spouse living abroad, the survivor pension is paid in NIS to the beneficiary's Israeli bank account. Some funds permit international transfer, but most require the beneficiary to maintain an Israeli account, so keeping one open after the death is usually necessary.

In Practice — the survivor pension and NII interaction: The National Insurance Institute (NII / Bituach Leumi) pays a separate state survivor allowance (kitzba le'almon/almanah) under the National Insurance Law. The NII allowance is means-tested and reduced where the surviving spouse receives more than a threshold from a private pension fund. In 2026 the full NII survivor pension is approximately NIS 2,700 per month for a spouse under 40, rising with age. Once private pension income exceeds roughly NIS 6,000 per month, the NII benefit is partially reduced. Foreign-resident spouses who receive the Israeli pension fund payments from abroad should verify with the NII whether they remain entitled to the NII allowance — the rules depend on the deceased's NII contribution history and the survivor's residency status. See the separate guide on NII survivor benefits for the full means-test rules.

5. What Happens When There Is No Named Beneficiary

No valid beneficiary designation exists in three situations: the account holder never filed a form; the named beneficiary predeceased the account holder and no replacement was named; or the designated beneficiary has disclaimed the benefit. In all three cases, the pension fund balance falls into the estate (izavon) and is subject to the regular succession process.

That means a significant delay. A family that would otherwise receive the pension balance directly within weeks must instead obtain a succession order or probate order from the Israeli Registrar of Inheritance Affairs or the Family Court. An uncontested application takes a minimum of three to six months and can take considerably longer with complications: an overseas applicant, multiple heirs, or a disputed will. During that period, the pension fund keeps the account open and credits investment returns, but releases nothing.

Once the succession or probate order issues, it is presented to the pension fund manager together with the heirs' identity documents and any required tax clearance. The fund distributes the balance according to the order's terms, typically split between heirs in the proportions the order specifies.

Heirs dealing with an intestate pension account should also run the Pension Clearinghouse query described above. No beneficiary designation on file may simply mean the account holder never got around to submitting the form, not that the account does not exist. Many accounts of this type surface years after death when someone finds an old pay slip or bank statement.

6. Life Insurance and Mortgage Protection Policies

Life insurance in Israel operates on the same beneficiary designation principle as pension funds. The policy pays the named beneficiary directly on presentation of the death certificate and identity documents; the estate, the will, and the succession order are irrelevant where a valid designation exists.

Two types of life insurance come up regularly in Israeli estate files. The first is term life insurance (bituach chayim riv'oni), a policy the deceased took out independently to provide a lump sum for their family on death. The second, far more commonly encountered, is mortgage protection insurance (bituach chayim lemisgeret mashkanta), a declining balance policy linked to a home loan. Every Israeli mortgage lender requires the borrower to maintain a life insurance policy covering the outstanding loan balance. When the borrower dies, the insurer pays the outstanding mortgage directly to the bank; the family inherits the property clear of that debt. The benefit does not reach the family as cash but as an unencumbered property.

In Practice — mortgage insurance claims and timelines: On a borrower's death, the surviving family or heir must notify the bank and the insurance company within the timeframe set by the policy — typically 30 days. The bank will freeze the mortgage account pending the insurance claim. The insurance company requires a certified death certificate (apostilled if issued abroad), an Israeli translation, the policy number, and a claim form. Processing time is typically 30 to 60 days. Foreign heirs handling an Israeli mortgage property should contact the lending bank (Bank Hapoalim, Bank Leumi, Bank Mizrahi, or other) immediately after death to confirm the policy is in force and to receive the insurer's claim instructions. Failure to notify within the policy's deadline is the most common reason mortgage insurance claims are rejected — and the consequence is that the outstanding mortgage balance becomes a liability of the estate.

7. Tax on Inherited Israeli Pension Payouts

Israel has no inheritance tax. Heirs pay nothing to inherit an estate, no matter how large. That does not make pension payouts tax-free; it simply means there is no separate inheritance tax charge on top of the ordinary income rules that apply to the payout itself.

Monthly survivor pension payments are taxed as ordinary income in the hands of the recipient, subject to Israel's progressive income tax brackets (from 10% to 47% in 2026) and available personal credit points. A surviving spouse living outside Israel is subject to Israeli withholding at source by the pension fund; they may then claim a foreign tax credit in their own country of residence, depending on whether Israel and that country have a double tax treaty.

A lump-sum payout of accumulated savings (the pikadon component from a keren pensia, or the full balance of a kupat gemel) is also taxable. The tax rate and base depend on the composition of the fund: contributions made from post-tax income may qualify for a partial exemption, while employer contributions and investment returns are typically fully taxable. Without a reduced withholding certificate (ishur nikui mehupar) from the Israeli Tax Authority, the pension fund withholds at the default rate, usually the top marginal rate of 47%.

Getting the certificate requires the beneficiary to open an Israeli tax file (or verify an existing one) and submit Form 119 or the relevant pension-specific application to the ITA's Assessing Office. The ITA then issues a certificate specifying the reduced withholding rate that applies based on the beneficiary's expected annual income. For a foreign-resident beneficiary receiving a one-time lump sum with no other Israeli income, the applicable rate is often well below 47%. Applications typically take four to eight weeks to process, and the fund cannot pay the full balance until the certificate is presented or the default rate is applied.

In Practice — the 10-year new-immigrant pension exemption: If the deceased was a oleh chadash (new immigrant) still within the first 10 years of Israeli residency at the time of death, and if the pension savings accumulated during that period came from a foreign source or a foreign employer, those savings may qualify for the partial income tax exemption granted to new immigrants under Section 14 of the Income Tax Ordinance. The exemption does not transfer automatically to the beneficiary but may reduce the taxable portion of the payout. If the deceased was a new immigrant, the ITA Assessing Office for new immigrants (pkadit mas hakhnasa le'olim chadashim) should be consulted before the fund distributes. The relevant Assessing Office for English-speakers is typically in Tel Aviv or Jerusalem, and they communicate in English for olim files.

8. How to Claim as a Foreign Heir: Step by Step

A foreign heir claiming Israeli pension or life insurance death benefits without traveling to Israel can manage the entire process through an Israeli attorney acting under a power of attorney. The sequence below covers both named-beneficiary and no-beneficiary scenarios.

Step 1: Obtain and certify the death certificate. The Israeli Interior Ministry (Misrad HaPnim) issues Israeli death certificates. If the death occurred abroad, the foreign death certificate must be apostilled and then translated into Hebrew by a certified translator. Where the deceased was registered in Israel, the local registrar (lishkat ha-rasham) will already have the record; your attorney can obtain a certified extract.

Step 2: Run the Pension Clearinghouse query. Submit a query through the ITA machtila to identify every pension, provident fund, and savings account held in the deceased's name. An Israeli attorney can submit this on your behalf using a power of attorney. The result comes back in two to four weeks and is the definitive map of the pension assets.

Step 3: Contact each fund and insurance company. For each account identified, contact the fund manager or insurance company and request the death benefit claim package. You will need the death certificate, your own identity documents, proof of your relationship to the deceased (birth certificate, marriage certificate, all apostilled and translated), and the account number for a named-beneficiary claim. For an estate claim, you will also need the succession order.

Step 4: Apply to the ITA for a reduced withholding certificate. Do this before the fund is ready to pay, not after. Processing takes four to eight weeks. A late application means the fund withholds at 47% and you must then apply for a refund, which takes a further six to twelve months through the ITA's refund process.

Step 5: Receive the payment and report in your home country. Once the fund pays, the benefit may be taxable in your country of residence as foreign income. Check whether a double tax treaty exists between Israel and your country and whether the Israeli withholding can be credited against your domestic liability. Countries with an active tax treaty with Israel include the United States, United Kingdom, Germany, France, Canada, and Australia, among others.

In Practice — power of attorney for overseas heirs: Every step above can be handled remotely by an Israeli attorney under an apostilled general power of attorney. The power must be signed before a notary in your country, apostilled by the competent authority (in the US, this is the Secretary of State of the relevant state; in the UK, the FCDO; in Australia, a state government department), and sent to Israel as an original or certified copy. A scan is not sufficient for pension fund claims — the fund manager will require the original. Budget two to three weeks for the apostille process in most countries. The power of attorney should specifically authorise the attorney to receive financial account information, sign claim forms, interact with pension fund managers, and receive tax-related correspondence — generic powers occasionally fail to satisfy individual fund managers. Preparing a correctly drafted power is an area where it is worth investing in proper Israeli legal advice from the start.
Note: This guide describes the general framework for Israeli pension fund and life insurance death benefit claims and does not constitute legal advice. Specific fund terms, tax rates, and administrative requirements vary by fund manager and change over time. Consult a qualified Israeli attorney before submitting a pension claim, particularly where the estate is large, where there is a dispute over the beneficiary designation, or where the deceased was a new immigrant.