Israel Senior Pensions Face Lowest Adjustment Since 2021 Amid Low Inflation

Israel's senior citizenship pensions are projected to see their lowest adjustment since 2021, with an expected increase of less than 30 shekels in January, bringing the baseline monthly allowance for an individual from 1,838 shekels to approximately 1,867 shekels.

The adjustment is calculated based on consumer price indices, comparing November of the previous year to November of the prior year. Past updates reflected higher inflation periods, with increases of 3.3% in 2024 and 3.4% in 2025. The upcoming revision stems from a cumulative index increase of about 1.6% up to September, driven by fluctuating monthly figures, including a 0.5% drop in September due to lower fuel taxes and post-holiday tourism prices.

Inflation Scenarios and Central Bank Forecasts

Looking ahead to the final months of the year, the Bank of Israel projects inflation at 1.5% for 2026, aligning with stable index expectations. Three primary scenarios have been outlined for the January adjustment:

• Base scenario: Indices offset each other, resulting in a 1.6% adjustment.

• Low scenario: Combined drop of 0.4%, lowering the adjustment to 1.2%.

• High scenario: Combined increase of 0.4%, bringing the adjustment to 2%.

Impact on Other National Insurance Benefits

Unlike price-linked allowances, general disability, attendance, and child disability allowances are tied to the average national wage. In January, these wage-linked benefits grew by 3.4%, reaching 4,711 shekels for a full individual allowance, with final wage data to be published by the National Insurance Institute in late December.

Child allowances, which were frozen in 2025 under economic arrangements, are expected to see modest increases under the base scenario, raising the allowance for the first child from 173 to 176 shekels, and for subsequent children from 219 to 223 shekels. Final figures will be confirmed in mid-December upon the publication of the November index.