The year 2025 was particularly intense for A. He completed a long career in the air force as a career pilot, served roughly 150 days in reserve duty and, at the same time, started a new job as a junior employee at a high-tech company.
The salary was not especially high, but A. wanted to gain experience. He also knew that alongside his paycheck, he was entitled to reserve duty compensation, including as part of months-long preparations for Operation Rising Lion, in which he took part.
Recently, A. was stunned to receive a demand from the National Insurance Institute for a debt totaling tens of thousands of shekels. When he sought clarification, he learned that, according to National Insurance, he was not entitled to the full compensation already paid for his reserve service days and was now required to return part of the money.
“I didn't expect them to suddenly slash compensation that had already been paid,” A. said. “It really feels like you are being trampled.”
A.’s attempts to appeal the debt with National Insurance were unsuccessful, leading him to hire a private attorney to handle the matter. “I hope he manages to get me out of this mess,” A. said. “If not, the debt will grow to include legal fees as well.”
A. is one of many reservists who have found themselves, through no fault of their own, facing alarming notices of debts ranging from thousands to tens of thousands of shekels to National Insurance. The issue stems from a change in the law governing reserve duty compensation. Following the change, National Insurance informed reservists that the payments they received were too high and must be repaid retroactively.
Cycle of inflated paychecks
The legislative change, promoted in the Knesset at the initiative of the Finance Ministry, came into effect in May. Many reservists only became aware of it recently, after completing another round of reserve duty.
In practice, the amendment was intended to prevent cases of inflated reserve payments, particularly for salaried employees who served in the reserves while working intermittently. Reserve service performed alongside employment increased the income figures reflected in monthly pay slips. As a result, reserve compensation for the following month, which is calculated based on those pay slips, also increased.
This 'inflation' occurred gradually, without any practical way to stop it, because compensation was paid on an ongoing basis during reserve service, based on the most recent salary data, rather than only after the service period ended, as was customary before October 7.
According to the Finance Ministry, this situation necessitated the legislative correction, which now obligates reservists to repay compensation paid in excess of what the law allows.
Reservist Yehonatan Cohen, who served about 330 days, described his experience. “Half a year into the war, during which I received monthly payments from National Insurance, I received a 30,000-shekel grant through my workplace,” he said. “I checked with the personnel officer in my reserve unit and was told the money was rightfully mine.”
However, after completing another reserve rotation six months later, Cohen discovered a 35,000-shekel debt to National Insurance. “They claimed they had actually paid me twice,” he said. “Six months after transferring payments they said I was entitled to, and after I had verified my eligibility with the IDF, they suddenly demanded the money back, after I had already used it. I was forced to dip into my savings to cover the debt.”
Another problem created by the law change is that reservists whose salaries increased have since received notices requiring them to repay reserve compensation, unless they can prove, through employer documentation, that the salary increase was unrelated to reserve payments.
That was the case for Doron Shabtai, who spent two stressful weeks trying to understand why he was being asked to pay a 33,000-shekel debt. Shabtai, a social worker who served extended periods in the reserves since October 7, struggled to comprehend how he, of all people, could end up owing money to the state after such lengthy service.
In Shabtai’s case, it later emerged that the “debt” was not a debt at all. His salary had genuinely increased after he left his previous job between reserve rotations and began working as a professional manager at the Alon Center for Returning to Life, named after Alon Shamriz, which supports discharged reservists. The repayment demand was found to be incorrect and was ultimately canceled.
“Personally, I have only praise for National Insurance, which handled my case very well,” Shabtai said. “But even in my case, which involved an erroneous debt, it took significant effort on their part to resolve it. They make you feel like you are the only one this happened to, but I estimate hundreds are dealing with similar stories.”
National Insurance: We opposed the change during the war
Officials at National Insurance say they opposed implementing the legal change during the war, partly due to the difficulty of calculating reserve compensation under such conditions. Employers often struggle to report accurate salary data, excluding reserve-related supplements, which leads to confusion and calculation errors.
According to National Insurance spokeswoman Michaela Cohen, the institution has no discretion in the matter and is required to implement the law as written. “Our employees are working around the clock, many of them reservists themselves,” she said. “Changing legislation in the middle of a war created significant emotional strain and difficulty.”
The problem has also affected civil servants who served in the reserves while working intermittently. In those cases, the state has attempted to deduct excess payments directly from salaries. Recently, Education Ministry employees sent a letter to the Finance Ministry’s accountant general and the Civil Service Commission, protesting retroactive salary deductions tied to reserve compensation debts.
“A unilateral, urgent and nontransparent charge contradicts the principles of proper administration,” the employees wrote. “Our salary is not a playing field. Debt collection from an employee’s salary requires consent and due process under the law.”
They stressed that if reserve payments were indeed made unlawfully, they were obligated to return them. However, they demanded that calculations be handled by National Insurance rather than the accountant general, citing a loss of trust in the treasury’s ability to identify and correct the failures it created.
The accountant general’s office rejected claims of unjust deductions, stating in its response that a broad review is currently underway examining reserve service payments and how they are handled.
Shabtai has a practical proposal for the state. Even if mistakes were made and some individuals received excessive payments, the state should absorb the cost. “The state knew that changing the calculation method of a large body like National Insurance would lead to errors, and that in this case those errors could be devastating,” he said.
“Imagine waking up one morning to find out you owe tens of thousands of shekels that you no longer have. Think about what that does to a person, to a family. The state should have decided, and still can decide, that if mistakes were made in favor of reservists, and there is no evidence of fraud, the state should bear the cost of the error.”