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(a) An Established Fund, with the exception of an  Established Fund which falls under Section 78O, to which an Administrator has not been appointed by 1st June 2003 (in the section “the commencement day”), according to Section 68, the Commissioner will appoint to such fund a Special Administrator under Section 78D 1st August 2003.

(b) An Administrator appointed to a fund according to Section 68 prior to the commencement of this Law, will be deemed as a Special Administrator of that fund under Section 78D for a period of one year from the commencement day, and the Commissioner may extend the appointment period from time to time, according to Chapter Seven 1 of the Law.

(c) If, prior to the commencement date, a Management Committee has been appointed to a fund to which a Special Administrator has been appointed under Subsection (a), the members of the Committee will be deemed to be appointed as members of the management under Section 78D for a period of one year from the commencement date, and the Commissioner may extend the their post from time to time, in accordance with this section.

78A. The purpose of this Chapter is to deal with the actuarial depict of the Established Pension Funds, and to bring them to actuarial balance by changing the rights and duties of the members, and by government aid in order to enable the funds to pay the pensions to their members, all in consideration of the abilities of the national economy, while creating uniformity in the distribution of rights.

78B. (a) In this Chapter:

“The Public Committee” - The Committee appointed under Section 78C;

“The Commissioner” – The Commissioner appointed under the Provident Funds Regulations;

“Collective Agreement” - As defined in The Collective Agreement Law 5717 - 1957;

“Obligations of an Established Fund” - including future obligations;

“The Uniform Regulations” - The Regulations created by the Commissioner under Section 78I;

“The Government Companies Law” - The Government Companies Law 1975;

“Management” - Management appointed under Section 78D(b);

“Actuarial Balancing Mechanism” - Rules set in the regulation of an Established Fund according to instructions and conditions as determined by or as set by the Commissioner, from time to time, to comply with the privileges of the members of a fund while maintaining the actuarial balance;

“Special Administrator” - Appointed under Section 78D(b);

“Established Fund’s Assets” - Including future assets;

“Actuarial Surplus” “Actuarial Depict” “Actuarial Balance” - Positive or negative difference or a balance, as the case may be, between the sum of all the Established fund’s assets and the sum of the Established funds obligations, as determined in the actuarial balance prepared in accordance with the Provident Funds Regulations, and the instructions of the Commissioner.

“Depict Fund” - An Established fund, which is not a employer’s funds, which actuarial depict, on 31st December 2001 is greater than 10% of all the funds obligations, as listed in Section 1 of the first Addendum;

“An Established Fund” - An Insurer who is an Established fund under the Provident Fund Regulations;

“Employer’s Fund” - An Established fund whose regulations allow members of the fund to be the workers of only a certain employee, and are listed in Section 2 of the first Addendum;

“Provident Fund Regulations” - The Income Tax Regulations (Rules for Approval and Management of Provident Funds) 1964.

(b) Other terms in this Chapter will have the same meaning they have in the Provident Fund Regulations, unless stated otherwise in this Chapter.

78C. (a) A Government appointed Public Committee will present the Commissioner with a list of candidates for Special Administrators and for members of Management Committees, and will perform any other task required of her according to this Chapter.

(b) The  Public Committee will consist of five members as follows:

(1) a judge suggested by the Minister of Justice, after consultation with the Chief Justice of the Supreme Court, will Chair the Committee.

(2) three Committee members will be of the economics and state economy fields or members of academic institutions in maters relevant to the execution of this Chapter.

(3) a representative of the workers or the members, to be selected from a list prepared by the workers union.

(c) A person who fulfills the requirements of Section 24 (c) of the Government Companies Law may be appointed as a member of the Public Committee.

(d) Sections 17 and 17A of the Government Companies Law will apply to appointments of members to the Public Committee, mutatis mutandis,  and a person who himself, or one of his relatives, have linkage, whether personal, business or political to a Government Minister or a relative of a Minister will not be appointed to the Public Committee.

(e) A Public Committee member will be appointed to a five years term, commencing on the appointment day, and may be repainted.

(f) A majority of the Public Committee will be a valid quorum.

(g) The Public Committee’s decisions will be approved by a majority of it’s votes; in case of a tie, the Chairperson will have two votes.

(h) The authorities of the Public Committee and the validly of it’s actions will not be nullified by a Member vacating his position, or by any fault in a Member’s nomination, or any fault in a Member preventing him to continue his term.

(i) The Members of the Public Committee must act with loyalty towards the state, and act with due diligence and good faith, as any reasonable person would have acted at that position and under those circumstances for the fulfillment of the purpose of this Chapter.

(j) The State’s Comptroller may supervise the actions of the Public Committee; nothing in this sub-section will lessen any authority of the State’s Comptroller.

78D. (a) (1) The Commissioner will appoint, after considering the advice of the Public Committee, a Special Administrator for each Established Fund, with the exception of an Established Fund which falls under Section 78O, and he may appoint one Special Administrator for several funds or for all of them.

(2) Any person who fulfills the conditions set in Section 24(c) of the Government Companies Law, may be appointed as Special Administrator, provided that he gave an obligation to commit most of his time for his duty as the Special Administrator, and not to partake any other vocation without the permission of the Commissioner.

(3) Sections 17 and 17A of the Government Companies Law will apply to the appointments of a Special Administrator, mutatis mutandis,  and a person who himself, or one of his relatives, have linkage, whether personal, business or political to a Government Minister or a relative of a Minister will not be appointed as a Special Administrator.

(4) The Special Administrator will not serve at any position in a Provident fund or in a corporation controlled by a provident fund, and will not be employed, whether as a worker, as any other position, or as a councilor of a provident fund or a corporation controlled by a provident fund for a year from the ending of his term as Special Administrator; for the purpose of this section: “Control” - as defined in the Securities Law  1968.

(b) (1) The Commissioner will appoint, after considering the advice of the Public Committee, for each Established Fund to which a Special Administrator was appointed under Subsection (a), a Management of three members, and may appoint one Management to several of the funds or to all of them.

(2) And these are the members of the Management:

(a) Two members will be will be of the economics and state economy fields or members of academic institutions in maters relevant to the execution of this Chapter, and will be suggested by the Public Committee, and instead one of them a judge may  be appointed  after consultation with the Minster of Justice; and one of the above two members shall be appointed chairperson;

(b) a representative of the workers or the members, suggested by the Public Committee from a list prepared by the workers unions.

(3) A person who fulfills the requirements of Section 16A of the Government Companies Law may be appointed as a member of the Management.

(4) Sections 17 and 17A of the Government Companies Law will apply to appointments of members to the Management, mutatis mutandis,  and a person who himself, or one of his relatives, have linkage, whether personal, business or political to a Government Minister or a relative of a Minister will not be appointed to the Management.

(5) The Management will have all the authority given to the Management Committee under Section 72 (d) including:

(a) The authority to approve a plan made by the Special Administrator to increase efficiency, under section 78L, prior to it’s submission to the Commissioner for approval.

(b) The authority to approve the recommendations of the Special Administrator, for any other convalescence steps required, above what is required by this Chapter.

(6) A member of the Management will not serve at any position in a Provident fund or in a corporation controlled by a provident fund, and will not be employed, whether as a worker, as any other position, or as a councilor of a provident fund or a corporation controlled by a provident fund for a year from the ending of his term as Special Administrator; for the purpose of this section: “Control” - as defined in the Securities Law 5728 - 1968.

(7) A majority of the members of the Management will be a quorum.

(8) The Management decision will be decided by a majority vote; in case of a tie the chairperson will have an extra vote.

(9) The authority of the Management and the validity of its decisions will not be effected by a vacancy in the Management or by any fault in the appointment of one of its members or by the continuation of one member’s tenure.

(10) The Members of the Management must act with loyalty towards the members of the Established Fund, and act with due diligence and good faith, as any reasonable person would have acted at that position and under those circumstances for the fulfillment of the purpose of this Chapter

(c) Section 68 will not apply to appointments of Special Administrator and Management under this Section.

78E. (a) A Special Administrator and Management will be appointed to a term of three years. The Public Committee may recommend to the Commissioner to extend the term, from time to time.

(b) A Special Administrator’s or a member of the Management’s term will terminate prior to its due date for one of the following:

(1) The Administrator or Member resigned by way of written resignation submitted to the Commissioner.

(2) The Administrator or Member may not fulfill his duty permanently, and the Commissioner, with the approval of the Public Committee ended the term of the nomination by written notice.

(3) The Administrator or Member was convicted of a felony the nature of, the severity of, or the circumstances of which, in the opinion of the Commissioner, deem the Administrator or Member not fit to serve as an Administrator or a Member.

(4) The Commissioner decided, with the approval of the Public Committee, that an Administrator or a Member is not fulfilling his duty as required by him in order to achieve the goals of this Chapter, or that an Administrator or a Member has acted, whether by act of omission, in opposition to the decisions an instructions of the Commissioner under this Chapter.

(5) The Commissioner determined that there is no need for the continuation of the service of an Administrator or  a Member for a Fund which will be jointly operated with another fund as instructed by the Commissioner under Section 78M.

78F. The Special Administrator will have all the authorities given to the Administrator appointed under Chapter Seven, mutatis mutandis, according to the instructions of this Chapter.

78G. The Special Administrator will manage the business of the Established Fund to which he was appointed, and will act to fulfill the purposes and goals of this Chapter, and among other acts he will:

(1) Locate the Fund’s assets, and if the assets are not under the Fund’s control or written in the ownership of the fund - transfer these assets to the Fund’s control, or write the assets under the Fund’s name.

(2) Realize and sell the Fund’s assets.

(3) Ensure the existence of a complete available data base of a the Fund member’s rights.

(4) Apply the Uniform Articles of Association.

(5) Apply the efficiency plan set under Section 78L, or the joint operation as instructed by the Commissioner under Section 78M.

78H. In fulfilling his duties and obligations the Special Administrator will act according to the Commissioner’s instructions, and the Commissioner may, among other, instruct the Special Administrator to take any acts to reduce the actuarial depict and to prevent the creation of one in the future, or to ensure the rights of all members of the Established Funds.

78I. (a) The Commissioner will prepare Uniform Rules of Association for all the Established Funds to which a Special Administrator has been appointed, in order to bring the Funds to actuarial balance, and the ensure their ability to pay the pensions of the Fund’s members, while taking into account the Government’s aid to the Funds given under Article Five, and to ensure uniformity in the member’s rights.

(b) The Uniform Rules of Association will be prepared according to the following principles:

(1) There will be no discrimination between members of a Fund.

(2) Uniform rules for calculating members right in all the Established Funds to which a Special Administrator has been appointed, and the rules will be set clearly, and will not be subject to the Fund’s or any other’s discretion.

(3) The calculation of a pension to a person receiving the pension starting 1^st October 2003 (in this paragraph: “the determining date”) or at a later date will be done as following, provided the actual increment in salary ceiling  for the pension starting from Mars of 1996, according to all methods of calculations will be 2% annually:

(a) With regard to members of an Established Fund, to which Sub - paragraph (b) does not apply - based on the relative average method of salary customary in the  Central Pensioners Fund of the Histadrut Employees Ltd., with amendments to be determined by the Commissioner in the Uniform Rules of Association.

(b) Concerning members of the Established Fund where the Commissioner determined that on the eve of the determining date the rules of association of the fund was based on the previous three years method, the allowance will be calculated as the total of the two elements as follows:

(1) For the period up to the determining date - based on the average for the last three years method as determined by the Commissioner.

(2) For the period from the determining date onwards - based on the relative average salary basis, as provided in Sub - paragraph (a); …