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Financial Literacy, Riester Pensions, and Other Private Old Age Provision in Germany

  • Bucher-Koenen, Tabea

    ()

    (Munich Center for the Economics of Aging (MEA))

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    Financial knowledge is not wide spread in Germany. In that respect we confi rm results found for other countries, like the United States and the Netherlands. Women, those with low education and low income, as well as households in east Germany are at risk of having low fi nancial literacy. In 2001 a state subsidized private pension scheme (Riester pensions) was introduced in Germany. The central question is, Are Riester pensions successful at encouraging individuals with low fi nancial literacy to save privately for old age? Our results indicate that financial literacy is positively related to privately saving for retirement independent of state subsidies. Levels of private coverage are particularly low among individuals in the lowest income quartile, who would profi t most from the state subsidies. At the same time they show the lowest levels of financial literacy.

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    Paper provided by Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy in its series MEA discussion paper series with number 11250.

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    Date of creation: 02 Dec 2011
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    Handle: RePEc:mea:meawpa:11250
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