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The law originates from the time of Bismarck, and enabled voluntary insurance in Germany for those interested. In 1972 the law was reformed, with the intention of enabling non-insured persons in Germany to join the insurance scheme by purchasing rights with retroactive payments. The last date for this arrangement in Germany was fixed as 1975. It is customary in the world for countries to sign mutual covenants on various matters, and it was in this spirit that Germany signed treaties on social security with many countries (such as the United States, Canada and Turkey). Such a treaty was signed in 1975 with Israel also, and it enabled any Israeli citizen to join the Germany national insurance, with full rights, as if he were a German citizen. The German pension scheme was opened up to Israeli citizens who fulfilled certain conditions, and not necessarily ex residents of Germany or Holocaust survivors, as is sometimes mistakenly thought. Thus, among the scheme's clients were also minority groups and others. Few people had the foresight at that time to recognize the profitability inherent in the German pension and in fact, up until close to the enrollment closing date (in June 1983) enrollment with the German pension was negligible (mainly because it was not extensively publicized). However, some three months prior to the closing date for enrollment, Advocate Israel Perry discovered the scheme, set up the Organization for the Implementation of the Treaty, and set up an extensive advertising campaign in order to inform the Israeli public of this unique economic opportunity. About 30 thousand people responded to the advertisements published by the Organization for the Implementation of the Treaty, becoming eligible for rights in the "German pension". The German national insurance grants its insured three kinds of pension: retirement pension, disability pension, and survivors pension. Usually, a person pays for pension insurance over the course of his working life, however, as mentioned, the German national insurance gave the new insureds (of which all the Israeli enrollees were such) the right to purchase the insurance rights by means of a retroactive payment, and for this purpose a one-off payment was required to cover the monthly premiums retroactively for the years 1956-80 ("the investment"). Every enrollee eligible for the German pension could finance the one-off investment amount either from his own funds or, alternatively, take advantage of the financing services offered him by the Organization for the Implementation of the Social Security Treaty. Advocate Israel Perry obtained the financing to provide loans for the enrollees from a German bank (the BHF). The bank granted the financing at significantly lower interest than what was customary in the German credit market - not to mention the Israeli. The German bank made its loan conditional upon two securities: - An irrevocable standing order from the borrower to repay the loan out of the pension that he would receive
- Special insurance arrangements enabling discharge of the loan immediately upon the demise of the borrower-insured. This arrangement was particularly important to the inheritors, who were thereby freed from being burdened with an unforeseen debt.
Since the BHF is a wholesale bank that does not provide loans to small customers (which is the reason for the low interest) the loans were provided by two companies whose establishment was brought about by Advocate Israel Perry for the purpose of financing the German pension: BGF and BGA. The majority of the investments were made between 1988-1993. On reaching the investment date the German pension enrollees chose as follows: - 9,000 insureds took long-term loans
- 700 insureds took short-term loans
- 3,000 insureds financed their investment independently
- 3,500 insureds have passed away
- 1,000 applicants were rejected by the insurance company because of their state of health
- 1,000 people did not want to harm special benefits that they were entitled to
- 500 applicants lived outside the "green line" and in eastern Jerusalem, and could not implement their eligibility (the German government recognizes only Israelis residing within the 1967 borders).
All the 12,700 eligible enrollees who implemented their right to a German pension enjoy a regular monthly pension. - All the enrollees who invested their own funds (amounts ranging between DM 40,000 and DM 100,000) enjoy the best investment that they have ever made.
All the enrollees who chose the financing scheme offered them by the Organization for the Implementation of the Treaty, after signing documents, investing nothing (other than what they chose), and taking no risk upon either themselves or their survivors, started to receive, every month, a free part of the pension to the tune of between DM 100 and DM 1,000, according to each client's personal data (on average about DM 450).
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