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Financial Literacy and Pension Plan Participation in Italy

Author

Listed:
  • Elsa Fornero

    (University of Turin and CeRP-Collegio Carlo Alberto)

  • Chiara Monticone

    (CeRP-Collegio Carlo Alberto)

Abstract

By requiring individuals to decide whether to participate in (newly established) pension funds, how much to contribute and how to invest their retirement wealth, pension reforms have raised concerns about the ability of households to deal with financial decisions. Using the Bank of Italy's Survey on Household Income and Wealth, our empirical analysis shows that most individuals lack knowledge of basic concepts such as interest rates and inflation. Males, the more educated and residents in the Centre-North possess higher literacy. As for the effects, financial literacy has a positive and significant impact on the probability of pension plan participation.

Suggested Citation

  • Elsa Fornero & Chiara Monticone, 2011. "Financial Literacy and Pension Plan Participation in Italy," CeRP Working Papers 111, Center for Research on Pensions and Welfare Policies, Turin (Italy).
    • Handle: RePEc:crp:wpaper:111
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    File URL: http://www.cerp.carloalberto.org/wp-content/uploads/2011/03/wp_111.pdf
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    Keywords

    Financial literacy; retirement planning; pension plan participation;
    All these keywords.

    JEL classification:

    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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