(Lack of) Pension Knowledge

23 Pages Posted: 14 Sep 2013

See all articles by Alan Barrett

Alan Barrett

Economic and Social Research Institute; IZA Institute of Labor Economics

Irene Mosca

National University of Ireland, Maynooth (NUI Maynooth)

Brendan Whelan

Trinity College (Dublin)

Abstract

Governments are increasingly concerned about the capacity of pensions systems to meet demands in the coming years. According to the OECD, one part of the policy response in many countries will be greater private provision on the part of individuals through occupational and other pension arrangements. If such a strategy is to work, it requires that individuals are well-informed about pensions. However, there are many reasons to believe that individuals may not be well-informed due to the complexity of pensions systems and degrees of myopia. In this paper, we assess levels of knowledge of pensions using a representative sample of older Irish people. Looking at people who are enrolled in pension schemes, we find that two thirds of these people do not know what amount will be paid out on retirement and/or whether the payments will be in the form of lump-sums, monthly payments or both. Women are more likely not to know, as are people with lower levels of education. While one policy conclusion might be to direct pensions-related information at certain groups, another approach might be to extend the mandatory elements in pension systems such as contribution rates.

Keywords: pensions, knowledge, older workers

JEL Classification: I38, J14

Suggested Citation

Barrett, Alan M. and Mosca, Irene and Whelan, Brendan, (Lack of) Pension Knowledge. IZA Discussion Paper No. 7596, Available at SSRN: https://ssrn.com/abstract=2325854 or http://dx.doi.org/10.2139/ssrn.2325854

Alan M. Barrett (Contact Author)

Economic and Social Research Institute ( email )

4 Burlington Road
Dublin 4
Republic of Ireland
+35 31 667 1525 (Phone)
+35 31 668 6231 (Fax)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Irene Mosca

National University of Ireland, Maynooth (NUI Maynooth) ( email )

Maynooth, County Kildare W23 F2H6
Ireland

Brendan Whelan

Trinity College (Dublin) ( email )

2-3 College Green
Dublin, D2

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