Financial Literacy And Pension Planning Of Mongolian Herders

Pension planning is an internationally accepted tool for income substitution and poverty reduction in old age. The livestock sector is a traditional economic sector that still plays an essential role in the culture and economics of Mongolia. Herders account for nearly 24.5 percent of the total workforce. Pension income is the second monetary income source for herders. However, as of 2017, 32 percent of herder households are in poverty, and only 24 percent of herders participated in the social insurance program. This paper investigates the pension planning of a survey among 350 herder households in Mongolia in 2017. The study aims to pay attention to herder's pension awareness, knowledge, participation in pension, and to identify factors that influence pension participation. The research results indicate that less than half of total herders make financial plans for their retirement, although only 27 percent of participants pay social insurance fees regularly in various amounts. Social insurance fees paid by the herders are positively affected by education, age, and social insurance coverage, whereas the size of the loan has a negative impact. Our conclusion highlighted that improving herders' motivation, knowledge about retirement and basic financial literacy are essential. Policymakers and local government agencies need to develop policy tools to motivate the young herder's pension participation to break out a poverty cycle.