Hostname: page-component-7c8c6479df-p566r Total loading time: 0 Render date: 2024-03-19T05:51:52.826Z Has data issue: false hasContentIssue false

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

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.)

References

Agnew, J. R., Szykman, L., Utkus, S. P. and Young, J. A. (2007) Literacy, trust and 401(k) savings behavior. Working paper CRR WP 2007–10, Center for Retirement Research at Boston College.CrossRefGoogle Scholar
Ameriks, J., Caplin, A. and Leahy, J. (2003) Wealth accumulation and the propensity to plan. Quarterly Journal of Economics, 118: 10071047.CrossRefGoogle Scholar
Australia and New Zealand Banking Group (2008) ANZ Survey of Adult Financial Literacy in Australia. Melbourne, Australia: Australia and New Zealand Banking Group.Google Scholar
Banca d'Italia (2009) Trasparenza delle operazioni e dei servizi bancari e finanziari. Correttezza delle relazioni tra intermediari e clienti. Rome, Italy: Banca d'Italia.Google Scholar
Banca d'Italia (2010) Indagini campionarie. I bilanci delle famiglie italiane nell'anno 2008. Supplementi al Bollettino Statistico Nuova serie N 8. Anno XX – 10 febbraio 2010.Google Scholar
Banca d'Italia, Consob, Covip, Isvap, Autorità Garante della Concorrenza e del Mercato (2010) Protocollo d'intesa tra Autorità in materia di educazione finanziaria. Rome, 9 June 2010.Google Scholar
Bernheim, D. D. (1998) Financial illiteracy, education, and retirement saving. In Mitchell, O. S. and Schieber, S. J. (eds), Living with Defined Contribution Pensions. Philadelphia, PA: The Pension Research Council, Wharton School Pension Research Council, University of Pennsylvania, pp. 3868.Google Scholar
Cappelletti, G. and Guazzarotti, G. (2010) Le Scelte Previdenziali nell'Indagine dei Bilanci delle Famiglie della Banca d'Italia. Bank of Italy Occasional Papers No. 77 (December 2010).Google Scholar
Castellino, O. and Fornero, E. (eds) ( 2001) La riforma del sistema previdenziale italiano: Opzioni e proposte. Bologna: ll Mulino.Google Scholar
Castellino, O. and Fornero, E. (2008) Public policy and the transition to private pension provision in the United States and Europe. In Sanhari Mishra, S. (ed.), Pension Reforms. Some Concepts and Country Experiences. Punjagutta: ICFAI University Press.Google Scholar
Covip (2008) La previdenza complementare nel 2007. Roma: Commissione di Vigilanza sui Fondi Pensione. 27 Febbraio 2008.Google Scholar
Covip (2009) Relazione per l'anno 2008. Roma: Commissione di Vigilanza sui Fondi Pensione. 27 Febbraio 2008.Google Scholar
Covip (2010) La previdenza complementare. Principali dati statistici dati aggiornati a dicembre 2009. Roma: Commissione di Vigilanza sui Fondi Pensione.Google Scholar
Fornero, E. and Monticone, C. (2011) Financial literacy and pension plan participation in Italy. Netspar Discussion Paper 01/2011-019.Google Scholar
Guiso, L. and Jappelli, T. (2008) Financial literacy and portfolio diversification. EUI Working Paper (ECO 2008/31).Google Scholar
Guiso, L., Jappelli, T. and Padula, M. (2009) Pension risk, retirement saving and insurance. CSEF Working Paper No. 223, March 2009.Google Scholar
Gustman, A. L., Steinmeier, T. S. and Tabatabai, N. (2008) Do workers know about their pension plan type? Comparing workers’ and employers’ pension information. In Annamaria, Lusardi (ed.), Overcoming the Saving Slump: How to Increase the Effectiveness of Financial Education and Savings Programs. Chicago: University of Chicago Press, pp. 4781.Google Scholar
Istat (2002) Forze di lavoro – Media 2001. Available online at http://www.istat.it/dati/catalogo/20020611_01 (accessed 13 June 2011).Google Scholar
Istat (2004) Edifici ed Abitazioni. Censimento 2001. Rome, Italy: Istituto Nazionale di Statistica.Google Scholar
Istat (2010) Forze di lavoro – Media 2009. Available online at http://www.istat.it/dati/catalogo/20101116_00/=(accessed on 13 June 2011).Google Scholar
Jappelli, T. (2010) Economic literacy: an international comparison. The Economic Journal, 120: F429F451.CrossRefGoogle Scholar
Jappelli, T. and Padula, M. (2011) Investment in financial literacy and saving decisions. CERP Discussion Paper No. 8220.Google Scholar
Kimball, M. S. and Shumway, T. (2007) Investor Sophistication and the Home Bias, Diversification, and Employer Stock Puzzles. Ann Arbor: University of Michigan Mimeo.Google Scholar
Lusardi, A. and Mitchell, O. S. (2007) Baby boomer retirement security: the roles of planning, financial literacy, and housing wealth. Journal of Monetary Economics, 54(1): 205224.CrossRefGoogle Scholar
Lusardi, A. and Mitchell, O. (2011) Financial literacy and planning: Implications for retirement wellbeing. In Lusardi, Annamaria and Mitchell, Olivia S. (eds), Financial Literacy: Implications for Retirement Security and the Financial Marketplace. Oxford: Oxford University Press, forthcoming.Google Scholar
Lusardi, A., Mitchell, O. S. and Curto, V. (2010) Financial literacy among the young. Journal of Consumer Affairs, 44(2): 358380.CrossRefGoogle Scholar
Lusardi, A. and Tufano, P. (2008) Debt literacy, financial experience and overindebtedness. NBER Working Paper No. 14808, National Bureau of Economic Research.CrossRefGoogle Scholar
Rinaldi, A. (2011) Pension awareness and nation-wide auto-enrolment: the Italian experience. CeRP Working Paper 104/11.Google Scholar
Rivers, D. and Vuong, Q. H. (1988) Limited information estimators and exogeneity tests for simultaneous probit models. Journal of Econometrics, 39(3): 347366.CrossRefGoogle Scholar
van Rooij, M., Lusardi, A. and Alessie, R. (2008) Financial literacy, retirement planning, and household wealth. Paper presented at the ECB-CFS Conference on Household Finances and Consumption, Frankfurt, Germany (September 2008).Google Scholar
van Rooij, M., Lusardi, A. and Alessie, R. (2011) Financial literacy and stock market participation. Journal of Financial Economics, 101(2): 449472.CrossRefGoogle Scholar