Building on a longtime working history, leadership from the Center for Social Development (CSD) formally advised the Israeli government in May on best practices for implementing the country’s new law to confer universal savings accounts on children born in Israel. The law takes effect in January 2017.
Michal Grinstein-Weiss, PhD, CSD associate director, has worked since 2010 on fostering the idea of Child Development Accounts (CDAs) in Israel, her home country, while Michael Sherraden, PhD, CSD founding director, has shared CSD research findings about CDAs in the Middle East since 2004. Margaret Clancy, CSD policy director and an expert on U.S. children’s savings policies, including 529 college accounts, joined in presenting to the Israeli officials. She leads a large-scale policy demonstration on CDAs, the SEED for Oklahoma Kids (SEED OK) research experiment.
The three presented to groups responsible for planning and implementing the accounts at the Ministry of Finance and the National Insurance Institute (equivalent to the Social Security Administration in the United States). Attendees included the director of the Finance Ministry Budget Department and the deputy general of the National Insurance Institute, as well as senior leadership representing the Bank of Israel and financial markets.
“This is an important policy achievement for Israel,” Grinstein-Weiss said. “Building on the child allowance to provide universal children’s savings accounts will allow children in Israel a better start to graduating into adulthood. Ideally, this move will also help address some of the growing wealth inequalities in Israel, especially if the accounts are limited to asset-building purposes.”
Their presentations focused on the impact of other CDA programs around the globe, evidence-based strategies for implementation, and perspectives on managing the fiscal administration of the accounts in Israel’s unique financial ecosystem, where the accounts will build off of the existing government child allowance, a monthly entitlement grant provided to families with children. Israel is the first country to establish a CDA program that provides monthly deposits for account holders.
CSD’s recommendations focused on designing the accounts to ensure they are universal, automatic, progressive, centralized, simple, long-term focused and restricted to asset-building purposes, such as post-secondary education, homeownership or business enterprise.
“The Israeli CDA is a noteworthy achievement because it will include all resident newborns, including Jews, Palestinians, and others,” Sherraden said. “In addition, this is the first CDA in which the government will make regular monthly deposits from birth through age 18 or 21. While the deposits are modest, they will add up over time, and this can be an important example for other countries.”
Israel’s parliament, the Knesset, passed the law providing for creation of the CDAs in November 2015 after reviving the policy proposal earlier that year. Isaac Herzog, former minister of Welfare and Social Services, championed the first draft of the policy proposal for CDAs in 2010 after working closely with Grinstein-Weiss and the CSD team.