Hostname: page-component-cd9895bd7-8ctnn Total loading time: 0 Render date: 2024-12-26T05:57:26.941Z Has data issue: false hasContentIssue false
  • English
  • Français

Financial literacy and retirement planning in chile*

Published online by Cambridge University Press:  30 March 2015

NATALIA GARABATO MOURE
NATALIA GARABATO MOURE*
Affiliation:
University of New South Wales, Sydney, Australia (e-mail: [email protected])
Get access Rights & Permissions [Opens in a new window]

Abstract

This paper studies the relationship between financial literacy and retirement planning in Chile, a country with mandatory defined contribution pension plans at the core of its retirement policy. Using a novel dataset, we find that very few Chileans are planning for their retirement and that the levels of financial literacy are remarkably low with only 47% of the population understand compound interest and only 18% understand the concept of inflation. We also find a positive and significant relationship between financial literacy and retirement planning suggesting that investments in financial education could have a substantial impact on the way people think about retirement and therefore on their ability to reach retirement with adequate resources.

Keywords

D12D91H31Financial literacyretirement planningpensionsdefined contribution
Type
Articles
Information
Journal of Pension Economics & Finance , Volume 15 , Issue 2 , April 2016 , pp. 203 - 223
Copyright
Copyright © Cambridge University Press 2015 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Footnotes

*

I would like to thank my thesis supervisors, Denzil Fiebig and John Piggott, and also Olivia S. Mitchell, for their guidance and comments. The ARC Centre of Excellence in Population Ageing Research (CEPAR) provided strong intellectual and financial support, which is gratefully acknowledged. Reviewers’ comments led to considerable improvements in the final manuscript. Preliminary versions of this work were presented at UNSW where seminar participants, Stanley Cho, Denise Doiron, and Alan Woodland, provided useful comments.

References

Alessie, Rob, Van Rooij, Maarten, and Lusardi, Annamaria (2011) Financial literacy and retirement preparation in the Netherlands. Journal of Pension Economics and Finance, 10(9): 527–545.Google Scholar
Almenberg, Johan and Säve-Söderbergh, Jenny (2011) Financial literacy and retirement planning in Sweden. Journal of Pension Economics and Finance, 10(4): 585–598.Google Scholar
Bayer, Patrick J., Bernheim, B. Douglas, and Scholz, John Karl (2009) The effects of financial education in the workplace: evidence from a survey of employers. Economic Inquiry, 47(4): 605–624.Google Scholar
Behrman, Jere R., Mitchell, Olivia S., Soo, Cindy K., and Bravo, David (2012) How financial literacy affects household wealth accumulation. American Economic Review, 102(3): 300–304.Google Scholar
Bernheim, B. Douglas and Garrett, Daniel M. (2003) The effects of financial education in the workplace: evidence from a survey of households. Journal of Public Economics, 87(7/8): 1487.Google Scholar
Bernheim, Douglas D. (1998) Financial illiteracy, education, and retirement saving. In Mitchell, O. S. and Schieber, S. J. (eds), Living with Defined Contribution Pensions. Philadelphia, PA: University of Pennsylvania Press, pp. 38–68.Google Scholar
Berstein, Solange (2011) Implementación de la Reforma Previsional en Chile. Serie Documentos de Trabajo 45. Superintendencia de Pensiones.Google Scholar
Bucher-Koenen, Tabea and Lusardi, Annamaria (2011) Financial literacy and retirement planning in Germany. Journal of Pension Economics and Finance, 10(4): 565–584.Google Scholar
Crossan, Diana, Feslier, David, and Hurnard, Roger (2011) Financial literacy and retirement planning in New Zealand. Journal of Pension Economics and Finance, 10(4): 619–635.Google Scholar
Fornero, Elsa and Monticone, Chiara (2011) Financial literacy and pension plan participation in Italy. Journal of Pension Economics and Finance, 10(4): 547–564.Google Scholar
Gobierno de Chile, Ministerio de Desarrollo Social (2013) Encuesta CASEN 2009, Cuadros Ingresos 2009 @ONLINE.Google Scholar
Hastings, Justine S. and Mitchell, Olivia S. (2011) How financial literacy and impatience shape retirement wealth and investment behaviors. NBER Working Papers 16740. National Bureau of Economic Research, Inc.Google Scholar
Klapper, Leora and Panos, Georgios A. (2011) Financial literacy and retirement planning: the russian case. Journal of Pension Economics and Finance, 10(4): 599–618.Google Scholar
Kritzer, Barbara E. (2008) Chile's next generation pension reform. Tech. rept. 2. Social Security Bulletin.Google Scholar
Law 20,255 (2008) Decreto ley numero 20,255 del 11 de marzo de 2008. Biblioteca del Congreso Nacional de Chile.Google Scholar
Lusardi, Annamaria and Mitchell, Olivia S. (2011 a) Financial literacy and planning: implications for retirement wellbeing. Working Paper 17078. National Bureau of Economic Research.Google Scholar
Lusardi, Annamaria and Mitchell, Olivia S. (2011 b) Financial literacy and retirement planning in the United States. Journal of Pension Economics and Finance, 10: 509–525.Google Scholar
Lusardi, Annamaria and Mitchell, Olivia S. (2014) The economic importance of financial literacy: theory and evidence. Journal of Economic literature, 52(1): 5–44.Google ScholarPubMed
OECD (2005) Improving Financial Literacy: Analysis of Issues and Policies. Paris, France: OECD.Google Scholar
OECD (2008) Improving Financial Education and Awareness on Insurance and Private Pensions. Paris, France: OECD.Google Scholar
Perticara, Marcela and Celhay, Pablo (2010) Informalidad Laboral y Políticas Públicas en Chile. Ilades-Georgetown University and Universidad Alberto Hurtado.Google Scholar
Sekita, Shizuka (2011) Financial literacy and retirement planning in Japan. Journal of Pension Economics and Finance, 10(4): 637–656.CrossRefGoogle Scholar
Superintendencia de administradoras de fondos de pensiones, Chile (last modified June 21, 2011 a) Cómo se Diferencian los Distintos Tipos de Fondos? Available online at http://www.safp.cl/573/article-2835.html.Google Scholar
Superintendencia de administradoras de fondos de pensiones, Chile (last modified June 21, 2011 b) Qué Pasa Si el Afiliado no Elige Fondo? Available online at http://www.safp.cl/573/article-2840.html.Google Scholar
Superintendencia de administradoras de fondos de pensiones, Chile (last modified June 21, 2011 c) Sistema de Pensiones: A Punto de Pensionarse.Google Scholar
UNESCO (2013) Isced 1997 mappings @ONLINE.Google Scholar