The importance of pensions as part of the principles of social security is clear – the pension is intended to protect the continued dignified life of an employee in his old age and to prevent a situation of shortage during retirement.
This importance was also clear when it came to bankruptcy proceedings. Until now, when an insurance company wanted to get its hands on the pension fund of a bankrupt saver, this was impossible, even when the borrower did not meet the payments of a loan he took from that company in which he pledged his pension rights. The company, in such a case, had to wait until the debtor reached retirement age. Even the trustee in the bankruptcy proceedingcould not get his hands on the bankrupt’s pension funds before the date for their payment (i.e., retirement age).
In a precedent-setting ruling recently handed down by the Supreme Court, it was determined that a woman who took out a loan from the insurance company and was unable to repay it on time due to financial difficulties and was later declared bankrupt, agreed at the time of taking the loan that the money she accumulated, including her old-age pension, would be made available for early redemption and serve as a guarantee for the loan she took. Therefore, the Supreme Court justices ruled that the insurance company has the right to collect the debt by offsetting the pension funds, already now, and not only when the debtor reaches retirement age.
This ruling effectively determined that there are cases in which the provision of credit by insurance companies against the pledge of pension funds will prevail over the social purpose of these funds.
Our recommendation, of course, is not to take loans, and certainly not to pledge pension funds, because this means that we may be left without them.
