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Improving the Financial Education and Financial Literacy

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To increase competition in the Israeli financial system ... Population of over 20 year olds, covered by a pension or savings plan for ... – PowerPoint PPT presentation

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Title: Improving the Financial Education and Financial Literacy


1
Improving the Financial Education and Financial
Literacy The Israeli Perspective
OECD, Insurance and Private Pension Committee
78th Session, Paris, 14-15 December 2006
Lavi Schiffenbauer Head of Information and
Development Department
Capital Market, Insurance and Savings Division,
Ministry of Finance, State of Israel
2
Contents
  • The publics financial assets portfolio
  • The CMISDs mission and goals
  • Why financial education has growing importance in
    Israel
  • Findings from the social survey of the Israeli
    CBS
  • Fundamental aims of the CMISD in terms of
    financial education
  • Improving financial education in Israel
  • Infrastructure supporting financial education in
    Israel - Illustrations

Capital Market, Insurance and Savings Division,
Ministry of Finance, State of Israel
3
The Capital Market, Insurance and Savings Division
  • The Commissioner of the CMIS
  • Provident funds
  • Pension funds
  • Life insurance
  • Non-life insurance
  • Health insurance
  • Actuary
  • Capital market
  • Supervision of the Institutional entities
  • Agents advisors
  • Information reporting
  • Money services providers
  • Public complaints
  • Enforcement Investigations
  • Information development (research)

Capital Market, Insurance and Savings Division,
Ministry of Finance, State of Israel
4
The Publics Financial Assets Portfolio
Total assets (09/2006) NIS 1,762 ( Billions 410)
Distribution of long-term savings mechanisms,
09/2006
Distribution of asset portfolio by institutional
composition, 09/2006
Source Bank of Israel
Source Bank of Israel
Capital Market, Insurance and Savings Division,
Ministry of Finance, State of Israel
5
The CMISDs Mission
To assure the optimal level of financial security
to the customers of the financial services in
Israel which are supervised by the division
Capital Market, Insurance and Savings Division,
Ministry of Finance, State of Israel
6
The CMISDs Primary Goals
To promote, encourage and ensure
  • A variety of financial products, available to
    all and for every need
  • Integrity, transparency and fair products
    pricing
  • Customers awareness and comprehension for
    intelligent acquisition of financial products

Customers side
  • Securing the institutions stability to ensure
    solvency of public obligations
  • Securing system stability

Financial institutions side
System wide considerations
  • Open, fair and competitive financial markets

Capital Market, Insurance and Savings Division,
Ministry of Finance, State of Israel
7
Why Financial Education has Growing Importance in
Israel
  • To increase competition in the Israeli financial
    system
  • The increasing complexity of financial services
    requires greater understanding
  • Changes in social-demographic issues

Capital Market, Insurance and Savings Division,
Ministry of Finance, State of Israel
8
Findings From the Social Survey of the Israeli CBS
Population of working
40-65 year olds, according to the amount of
thought they put into their retired years
Population of over 20 year olds, covered by a
pension or savings plan for retirement, according
to their choice of advisor
Capital Market, Insurance and Savings Division,
Ministry of Finance, State of Israel
9
Fundamental Aims of CMISD in terms of Financial
Education
  • Help the consumer to better understand their
    personal finance and identify correctly the
    relevant risks
  • Promote a responsible consumer approach in
    personal financial decisions
  • Strengthening the consumer status in the
    financial market

Capital Market, Insurance and Savings Division,
Ministry of Finance, State of Israel
10
How the CMISD Implements its Goals
  • Fair disclosure
  • Market transparency
  • Reliability by means of financial consumer
    information Comparison tables, Internet sites,
    E-learning information, Public complaints
    department, Consumer guides

Capital Market, Insurance and Savings Division,
Ministry of Finance, State of Israel
11
Improving Financial Education in Israel,
2004-2006
  • Circular letters issued by the commissioner
  • Annual report to life insurance policyholders or
    pension funds members
  • Consumer guide to long-term care insurance
  • How members/policyholders can transfer their
    accounts between the long-term saving plans
  • Required reports to members of provident funds
    following transfer or withdraw of funds
  • Full and fair disclosure in life insurance

Capital Market, Insurance and Savings Division,
Ministry of Finance, State of Israel
12
Improving Financial Education in Israel,
2004-2006
  • Circular letters issued by the commissioner
  • Publication of highlights of insurance companies
    financial reports in newspapers
  • Required information in the company's/funds
    internet site
  • Regulations regarding advertising investment
    yields for participating policies, provident
    funds or pension funds
  • List of individual assets for participating
    policies to be reported on the company's internet
    site
  • Regulating pension consultant and agents

Capital Market, Insurance and Savings Division,
Ministry of Finance, State of Israel
13
Infrastructure Supporting Financial Education in
Israel Illustrations
  • Compulsory vehicle insurance calculator
  • http//www.mof.gov.il/hon/2001/insurance/car.asp
  • Provident funds comparison tool
  • http//gemelnet.mof.gov.il/Tsuot/UI/DafMakdim.aspx
  • The objects are
  • An accessible, reliable, up-to-date information
    source
  • An independent comparison ability by the customer
  • A thorough examination of the yields/rates

Capital Market, Insurance and Savings Division,
Ministry of Finance, State of Israel
14
The Calculator Illustration I
Importance of comparing car insurance rates
General insurance terms
To use the calculator
Capital Market, Insurance and Savings Division,
Ministry of Finance, State of Israel
15
  1. Type of car (public or private), date of
    beginning of the policy
  2. Input parameters of the youngest driver profile
    (gender, age, years of driving experience)
  3. Additional drivers information (accidents,
    violations)
  4. Car information (air bags, engine, etc.)

Capital Market, Insurance and Savings Division,
Ministry of Finance, State of Israel
16
Explanation of the parameters
Rates according to company
Capital Market, Insurance and Savings Division,
Ministry of Finance, State of Israel
17
The Provident Funds Comparison Tool
Illustration II
  1. Selection by company name or number
  2. Selection of the period

1
2
Capital Market, Insurance and Savings Division,
Ministry of Finance, State of Israel
18
The results
Reporting dates
Average monthly return
Gross accumulated return
Total assets
Net withdrawals
The name and number of the company
commission
Gadish Dash Provident funds average
Capital Market, Insurance and Savings Division,
Ministry of Finance, State of Israel
19
  1. Comparison to market indices
  2. Selecting the type of report and company
  3. Selecting the market indices
  4. Selecting the type of data (monthly, accumulated,
    annually)
  5. Selection of the period

3
1
2
4
5
Capital Market, Insurance and Savings Division,
Ministry of Finance, State of Israel
20
Dash
Gadish
DJ
The resulting report

The Dow-Jones
The US
Dash 552
Gadish - 106
Accumulated return
Monthly return
Total assets
Capital Market, Insurance and Savings Division,
Ministry of Finance, State of Israel
21
In Summery
  • ..The Sun of Righteousness Shall Arise With
    Healing in its Wings..
  • (Malachi, Chapter 4, Verse 2)
  • Thank you for your attention
  • lavis_at_mof.gov.il

Capital Market, Insurance and Savings Division,
Ministry of Finance, State of Israel
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