Skip to main content
×
Home

Financial literacy and retirement planning in chile*

  • NATALIA GARABATO MOURE (a1)
Abstract
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.

Copyright
Footnotes
Hide All
*

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.

Footnotes
References
Hide All
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): 527545.
Almenberg Johan and Säve-Söderbergh Jenny (2011) Financial literacy and retirement planning in Sweden. Journal of Pension Economics and Finance, 10(4): 585598.
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): 605624.
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): 300304.
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.
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. 3868.
Berstein Solange (2011) Implementación de la Reforma Previsional en Chile. Serie Documentos de Trabajo 45. Superintendencia de Pensiones.
Bucher-Koenen Tabea and Lusardi Annamaria (2011) Financial literacy and retirement planning in Germany. Journal of Pension Economics and Finance, 10(4): 565584.
Crossan Diana, Feslier David, and Hurnard Roger (2011) Financial literacy and retirement planning in New Zealand. Journal of Pension Economics and Finance, 10(4): 619635.
Fornero Elsa and Monticone Chiara (2011) Financial literacy and pension plan participation in Italy. Journal of Pension Economics and Finance, 10(4): 547564.
Gobierno de Chile, Ministerio de Desarrollo Social (2013) Encuesta CASEN 2009, Cuadros Ingresos 2009 @ONLINE.
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.
Klapper Leora and Panos Georgios A. (2011) Financial literacy and retirement planning: the russian case. Journal of Pension Economics and Finance, 10(4): 599618.
Kritzer Barbara E. (2008) Chile's next generation pension reform. Tech. rept. 2. Social Security Bulletin.
Law 20,255 (2008) Decreto ley numero 20,255 del 11 de marzo de 2008. Biblioteca del Congreso Nacional de Chile.
Lusardi Annamaria and Mitchell Olivia S. (2011 a) Financial literacy and planning: implications for retirement wellbeing. Working Paper 17078. National Bureau of Economic Research.
Lusardi Annamaria and Mitchell Olivia S. (2011 b) Financial literacy and retirement planning in the United States. Journal of Pension Economics and Finance, 10: 509525.
Lusardi Annamaria and Mitchell Olivia S. (2014) The economic importance of financial literacy: theory and evidence. Journal of Economic literature, 52(1): 544.
OECD (2005) Improving Financial Literacy: Analysis of Issues and Policies. Paris, France: OECD.
OECD (2008) Improving Financial Education and Awareness on Insurance and Private Pensions. Paris, France: OECD.
Perticara Marcela and Celhay Pablo (2010) Informalidad Laboral y Políticas Públicas en Chile. Ilades-Georgetown University and Universidad Alberto Hurtado.
Sekita Shizuka (2011) Financial literacy and retirement planning in Japan. Journal of Pension Economics and Finance, 10(4): 637656.
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.
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.
Superintendencia de administradoras de fondos de pensiones, Chile (last modified June 21, 2011 c) Sistema de Pensiones: A Punto de Pensionarse.
UNESCO (2013) Isced 1997 mappings @ONLINE.
Recommend this journal

Email your librarian or administrator to recommend adding this journal to your organisation's collection.

Journal of Pension Economics & Finance
  • ISSN: 1474-7472
  • EISSN: 1475-3022
  • URL: /core/journals/journal-of-pension-economics-and-finance
Please enter your name
Please enter a valid email address
Who would you like to send this to? *
×

Keywords:

Metrics

Full text views

Total number of HTML views: 9
Total number of PDF views: 100 *
Loading metrics...

Abstract views

Total abstract views: 559 *
Loading metrics...

* Views captured on Cambridge Core between September 2016 - 22nd November 2017. This data will be updated every 24 hours.