The perception of tax concessions in retirement savings decisions
Purpose - Research to date has reported ambiguous results on the influence of tax concessions on retirement savings decisions. The purpose of this paper is to investigate the influence of tax concessions on private retirement investment decisions by analyzing actual retirement decision processes and the rationales behind these decisions in-depth. Design/methodology/approach - Qualitative semi-structured interviews on actual retirement savings decisions were conducted with private investors (17) and their respective bank advisors (5). Decision-making rationales are analysed by means of semantic and causal coding of verbal data as well as by highlighting the complexities of decision processes represented in individual investment narratives. Findings - Results indicate that taxes do not matter much, neither during the decision to join a private retirement plan, nor when choosing a specific investment product. Financial planning for retirement consists of saving disposable income instead of the required savings premium and choosing a secure type of investment which yields more than a savings account. Savers do not base their decisions on calculating and comparing rates of return or tax benefits. Instead, comparatively unqualified relatives as well as bank advisors and the desire for trust and security are of major relevance. Research limitations/implications - The generalization of results is limited in so far as they refer to a relatively small interview sample. The study shall thus prompt further research that takes the decision-making context and the interrelation between several context factors systematically into account. Originality/value - The study is of value in that it highlights the difficulties private investors' experience when making actual – rather than hypothetical – retirement savings decisions and the rationales behind seemingly “imperfect” decisions. It shows that retirement savings decisions are heavily linked with the social decision-making context. These results are closely linked to the recent debate on “responsibilization”, critical perspectives on the tendency of states to hold individuals increasingly accountable for aspects of market governance and social security.
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Volume (Year): 2 (2010)
Issue (Month): 3 (October)
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