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Why do Households Leave Money on the Table? The Case of Subsidized Pension Products

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  • Tobias Meyll
  • Thomas Pauls
  • Andreas Walter

Abstract

Many individuals only save money in their savings account for their old-age provision rather than investing in more profitable asset classes. That is despite the existence of subsidized pension products, for which smallest contributions can be made monthly, which guarantee the capital preservation, and which offer higher expected returns than saving money in bank deposits. We investigate the determinants that affect individuals’ decision to leave money on the table by not investing in subsidized pension products. Our results show that financial literacy and financial advice are positively related to holding such pension products. In that, our results emphasize the role of financial literacy and financial advisors for sound financial decision-making in increasingly complex financial markets.

Suggested Citation

  • Tobias Meyll & Thomas Pauls & Andreas Walter, 2020. "Why do Households Leave Money on the Table? The Case of Subsidized Pension Products," Journal of Behavioral Finance, Taylor & Francis Journals, vol. 21(3), pages 266-283, July.
    • Handle: RePEc:taf:hbhfxx:v:21:y:2020:i:3:p:266-283
    DOI: 10.1080/15427560.2019.1692209
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    Cited by:

    1. Pauls, Thomas, 2021. "The impact of temporal framing on the marginal propensity to consume," SAFE Working Paper Series 308, Leibniz Institute for Financial Research SAFE.
    2. Gallego-Losada, Rocío & Montero-Navarro, Antonio & Rodríguez-Sánchez, José-Luis & González-Torres, Thais, 2022. "Retirement planning and financial literacy, at the crossroads. A bibliometric analysis," Finance Research Letters, Elsevier, vol. 44(C).

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