An Empirical Study on the Financial Preparation for Retirement of the Independent Workers for Profit in Poland

Modern pension schemes are based on the delegation of responsibility for pension provision from state institutions to individuals, which implies voluntary retirement saving. Workers for profit (independent workers in household market enterprises) hold much greater personal responsibility for financing their pensions than workers for pay. The main aim of this study was to provide an empirical identification of economic and social factors that would determine the propensity toward long-term saving for pensions by independent, for-profit workers in Poland. Additionally, the study recognizes the level of saving accumulated by them as well as preferred forms in which this saving is made.In order to select determinants of pension saving, a logistic regression model was used. The data come from the direct survey conducted in 2020 by CAWI method (Computer-Assisted Web Interview) on a random nationwide sample of Poles. The analysis of the data also used other methods of descriptive and mathematical statistics. The conducted research showed that the respondents’ individual decisions concerning saving for retirement are affected by such factors as gender, age, family situation, amount of revenue, share of revenue from business activity in total revenue, and subjective assessment of the respondents’ financial situation. The respondents declared holding various, though not high, savings. Moreover, it turned out that independent workers for profit in Poland opt for non-conventional forms of gathering pension savings.

Can't save or won't save: financial resilience and discretionary retirement saving among British adults in their thirties and forties

This study examines retirement saving activity outside the state and workplace pension saving schemes among British adults aged between 30 and 49 on the premise that individuals are increasingly encouraged to save for their retirement in the new pension policy structure in Britain. The issue of under-saving among the younger adults has been studied with the focus on internal characteristics, such as undesirable attitudinal or behavioural tendencies (‘won't save’), or on external factors, such as income (‘can't save’). Building on these discussions, this study tests the role of internal characteristics and further examines the interplay between internal and external factors. The decision-making process for retirement saving is mapped based on the Model of Financial Planning with minor modifications. The analysis utilises the fourth wave of the Wealth and Assets Survey (2012/2014), and is conducted in the structural equation modelling framework. Results show that younger adults’ discretionary retirement saving is an outcome of a complex interplay between internal and external factors. Financial resilience, which indicates current financial behaviours and wellbeing, is found to be the strongest predictor for identifying a discretionary retirement saver, but it is closely connected to individuals’ income and home-ownership. The findings also suggest that social and economic arrangements are important to consider as social ageing, individuals’ projection on their lifestages, may be more informative than age per se for understanding younger adults’ retirement saving behaviour. These findings have important implications for the policies that aim to increase retirement saving participation.

Can Pension Reforms Moderate Inflation Expectation and Spur Savings? Evidence from Nigeria

This paper tests the prior-savings theory which proposes that pension savings could moderate inflation, and spur long-tenured savings for fixed capital formation. An augmented Toda-Yamamoto longrun non-causality technique was used to analyze data from 1980 to 2018. The outcome reveals that pension saving has significant negative causal flow to gross fixed capital formation, while gross fixed capital formation does not drive inflation expectation. The outcome suggests that prior-savings theory does not hold in the Nigerian case, which may infer that government borrowing from pension fund has been for consumption expenditure. The results generalize many developing economies with similar financial structure. The paper recommends that borrowed pension savings be invested in infrastructures in line with prior-saving theory. Fiscal policy reforms that broaden and deepen the nexus are recommended

In Search of the Optimal Saving Strategy for Pan-European Pension Products

The introduction of pan-European pension products in 2020 is associated with an ongoing debate on prescribing predefined saving strategy that would both deliver adequate performance and limit the down-side risk at the end of the saving horizon. Dynamic life-cycle saving strategies are generally accepted as a good risk-mitigation tool that can be individually set. Many research papers confirm the ability of life-cycle strategies to deliver high risk-reward outcomes. Objective of our paper is to test the ability of one-factor life-cycle saving strategies based on the age and/or the remaining saving horizon to deliver the promised value for PEPP savers. We constructed 18 saving strategies divided into three groups – static saving strategies with fixed proportion of equities, dynamic life-cycle strategies based on the age and/or remaining saving horizon, and quasi-active strategies combining two factors – the remaining saving horizon and price movement. We employed the model based on moving-block bootstrapping technique and performed simulations for various economic conditions. We have tested the expected saving performance combined with the down-side risk during the saving horizon. Our findings do not confirm the general findings on life-cycle saving strategies. We claim that having the age as the only factor defining the proportion of equities in the pension saving portfolio would not be optimal. However, we found that two-factor saving strategies look promising in delivering both lower down-side risk and higher performance over the saving horizon.

Targeting Risk Lovers? Taxation of Private Pension Savings, Risk Preferences, and Gender

Many countries need to stimulate savings, and especially voluntary pension planning, to meet the demands of an ageing population. This is especially true for the female population as women are expected to live longer while simultaneously having accumulated lower pension wealth. Sweden has been a front-runner in introducing tax-deferred designated pension accounts to stimulate private pension saving, along with self-directed individual public pension accounts. However, a particular feature of these tax-deferred designated pension accounts was that savings were taxed through a presumptive return. In this Article, we show that with heterogeneous risk preferences, this tax policy makes designated pensions unattractive for risk-averse individuals. Using data on self-directed choices and designated pension savings, we empirically confirm our result. In particular, we show that as women are on average more risk averse compared to men, this tax policy had negative effects for women. This Article thus sheds light on the importance of accounting for risk preferences in policymaking addressed towards stimulating adequate pension planning. The Article additionally sheds light on the overall negative consequences of a presumptive tax design such as, e.g., the Dutch “Box-III” tax system.