Ministry of Finance: Accepted the establishment of a fund that will constitute a yield guarantee

The draft Arrangements Law reveals that the Ministry of Finance has partially accepted the position of the Bank of Israel with regard to the establishment of a fund to which money will be deposited and will constitute a yield guarantee for the pension funds instead of the designated bonds.
The designated bonds are in fact issued by the government specifically to the pension funds. The total debt volume of the designated bonds today constitutes an order of magnitude of 230 million, which constitutes approximately 20% of the national debt. Because these bonds carry a higher interest rate than the risk-free interest rate practiced today, the government sought to discontinue this issue and instead support the pension funds only if these do not achieve a minimum return over time.
The designated bonds today provide an index-linked return of 4.86% on about a third of the pension funds' assets, while bonds of this type are also issued at a negative return today. Close to it and then the commitment of the state will be small to non-existent.
This commitment of the state has budgetary significance and therefore the Bank of Israel requested that the government establish a fund to which this safety net will be entrusted and thus the commitment will become real money. The Ministry of Finance refused such a deposit and claimed that an obligation enshrined in the Arrangements Law was sufficient. Of course, the Bank of Israel argued that such a commitment is not enough.
The compromise reached between the Bank of Israel and the Treasury actually leads to the establishment of such a fund, but only part of the government's commitment to a pension safety net will be deposited there. For example, in the first two years of the law, ie in 2021 and 2022, the Treasury will deposit an amount in the fund that will partially guarantee its commitment and this amount will gradually decrease.
In conclusion, it can be said that between an optimal situation in which the Treasury will deposit its commitment each year and a problematic situation in which no money will be deposited at all, a classic Mapanic compromise has been found.