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(Lack of) Pension Knowledge

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Author Info

  • Barrett, Alan

    ()
    (ESRI, Dublin)

  • Mosca, Irene

    ()
    (Trinity College Dublin)

  • Whelan, Brendan J.

    ()
    (Trinity College Dublin)

Abstract

Governments are increasingly concerned about the capacity of pensions systems to meet demands in the coming years. According to the OECD, one part of the policy response in many countries will be greater private provision on the part of individuals through occupational and other pension arrangements. If such a strategy is to work, it requires that individuals are well-informed about pensions. However, there are many reasons to believe that individuals may not be well-informed due to the complexity of pensions systems and degrees of myopia. In this paper, we assess levels of knowledge of pensions using a representative sample of older Irish people. Looking at people who are enrolled in pension schemes, we find that two thirds of these people do not know what amount will be paid out on retirement and/or whether the payments will be in the form of lump-sums, monthly payments or both. Women are more likely not to know, as are people with lower levels of education. While one policy conclusion might be to direct pensions-related information at certain groups, another approach might be to extend the mandatory elements in pension systems such as contribution rates.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 7596.

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Length: 23 pages
Date of creation: Aug 2013
Date of revision:
Handle: RePEc:iza:izadps:dp7596

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Related research

Keywords: pensions; knowledge; older workers;

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References

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  1. Fornero, Elsa & Monticone, Chiara, 2011. "Financial literacy and pension plan participation in Italy," Journal of Pension Economics and Finance, Cambridge University Press, vol. 10(04), pages 547-564, October.
  2. Bucher-Koenen, Tabea & Lusardi, Annamaria, 2011. "Financial literacy and retirement planning in Germany," MEA discussion paper series 11239, Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy.
  3. Annamaria Lusardi & Olivia S. Mitchell, 2011. "Financial Literacy around the World: An Overview," NBER Working Papers 17107, National Bureau of Economic Research, Inc.
  4. Christelis, Dimitris & Jappelli, Tullio & Padula, Mario, 2008. "Cognitive abilities and portfolio choice," CFS Working Paper Series 2008/35, Center for Financial Studies (CFS).
  5. Klapper, Leora & Panos, Georgios A., 2011. "Financial literacy and retirement planning : the Russian case," Policy Research Working Paper Series 5827, The World Bank.
  6. CLARK, ROBERT L. & d'AMBROSIO, MADELEINE B. & McDERMED, ANN A. & SAWANT, KSHAMA, 2006. "Retirement plans and saving decisions: the role of information and education," Journal of Pension Economics and Finance, Cambridge University Press, vol. 5(01), pages 45-67, March.
  7. Alessie, Rob & Van Rooij, Maarten & Lusardi, Annamaria, 2011. "Financial literacy and retirement preparation in the Netherlands," Journal of Pension Economics and Finance, Cambridge University Press, vol. 10(04), pages 527-545, October.
  8. Tabea Bucher-Koenen & Annamaria Lusardi, 2011. "Financial Literacy and Retirement Planning in Germany," CeRP Working Papers 109, Center for Research on Pensions and Welfare Policies, Turin (Italy).
  9. James Banks & Zoë Oldfield, 2006. "Understanding pensions: cognitive function, numerical ability and retirement saving," IFS Working Papers W06/05, Institute for Fiscal Studies.
  10. Bernheim, B. Douglas & Garrett, Daniel M., 2003. "The effects of financial education in the workplace: evidence from a survey of households," Journal of Public Economics, Elsevier, vol. 87(7-8), pages 1487-1519, August.
  11. Crossan, Diana & Feslier, David & Hurnard, Roger, 2011. "Financial literacy and retirement planning in New Zealand," Journal of Pension Economics and Finance, Cambridge University Press, vol. 10(04), pages 619-635, October.
  12. Bucher-Koenen, Tabea & Lusardi, Annamaria, 2011. "Financial literacy and retirement planning in Germany," Journal of Pension Economics and Finance, Cambridge University Press, vol. 10(04), pages 565-584, October.
  13. Diana Crossan & David Feslier & Roger Hurnard, 2011. "Financial Literacy and Retirement Planning in New Zealand," CeRP Working Papers 113, Center for Research on Pensions and Welfare Policies, Turin (Italy).
  14. Johan Almenberg & Jenny Säve-Söderbergh, 2011. "Financial Literacy and Retirement Planning in Sweden," CeRP Working Papers 112, Center for Research on Pensions and Welfare Policies, Turin (Italy).
  15. Almenberg, Johan & Säve-Söderbergh, Jenny, 2011. "Financial literacy and retirement planning in Sweden," Journal of Pension Economics and Finance, Cambridge University Press, vol. 10(04), pages 585-598, October.
  16. Tabea Bucher-Koenen & Annamaria Lusardi, 2011. "Financial Literacy and Retirement Planning in Germany," NBER Working Papers 17110, National Bureau of Economic Research, Inc.
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