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Financial literacy and pension plan participation in Italy*

Published online by Cambridge University Press:  11 October 2011

ELSA FORNERO
Affiliation:
University of Torino, CeRP-Collegio Carlo Alberto (e-mail: fornero@cerp.unito.it)
CHIARA MONTICONE
Affiliation:
OECD, CeRP-Collegio Carlo Alberto, and Netspar (e-mail: monticone@cerp.unito.it)

Abstract

Recent pension reforms in Italy require individuals to decide whether to participate in pension funds, how much to contribute, and how to invest their wealth, raising concerns about their ability to deal with financial matters. Using the Bank of Italy's Survey on Household Income and Wealth (SHIW), our empirical analysis shows that most individuals lack knowledge of basic concepts such as interest rates and inflation. Men, the more educated, and residents in the Centre–North possess higher financial literacy. We also find that financial literacy has a positive and significant impact on the probability of pension plan participation.

Type
Articles
Copyright
Copyright © Cambridge University Press 2011

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