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Financial Literacy and Retirement Planning in View of a Growing Youth Demographic: The Russian Case

Author

Listed:
  • Leora Klapper

    () (Development Research Group, the World Bank)

  • Georgios A. Panos

    () (Essex Business School, University of Essex)

Abstract

Our study contributes to the financial literacy literature by examining its association with retirement planning in an interesting and novel context, i.e. that of a country with a relatively old and rapidly ageing population, large regional disparities and a rapidly emerging financial market. Even though consumer borrowing is increasing very rapidly in Russia, we find that only 36.3% of respondents in our sample know about the working of interest compounding and only half can answer a simple question about inflation. In a country with pervasive public pension provision, we find that financial literacy is significantly and positively related to retirement planning using private pension funds and schemes. Residents in rural areas are much more reliant on the public provision and invest less in private schemes and savings. The results of our study have a clear policy implication; along with encouraging the availability of private retirement plans and financial products, efforts to improve financial literacy can be pivotal to the expansion in the use of such schemes.

Suggested Citation

  • Leora Klapper & Georgios A. Panos, 2011. "Financial Literacy and Retirement Planning in View of a Growing Youth Demographic: The Russian Case," CeRP Working Papers 114, Center for Research on Pensions and Welfare Policies, Turin (Italy).
  • Handle: RePEc:crp:wpaper:114
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    References listed on IDEAS

    as
    1. 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.
    2. van Rooij, Maarten & Lusardi, Annamaria & Alessie, Rob, 2011. "Financial literacy and stock market participation," Journal of Financial Economics, Elsevier, vol. 101(2), pages 449-472, August.
    3. van Rooij, Maarten C.J. & Lusardi, Annamaria & Alessie, Rob J.M., 2011. "Financial literacy and retirement planning in the Netherlands," Journal of Economic Psychology, Elsevier, vol. 32(4), pages 593-608, August.
    4. van Rooij, Maarten C.J. & Kool, Clemens J.M. & Prast, Henriette M., 2007. "Risk-return preferences in the pension domain: Are people able to choose?," Journal of Public Economics, Elsevier, vol. 91(3-4), pages 701-722, April.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Financial literacy; Retirement Planning; Pensions; Russia;

    JEL classification:

    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors

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