Trust and Retirement Preparedness: Evidence from Singapore

Loading...
Thumbnail Image
Penn collection
Wharton Pension Research Council Working Papers
Degree type
Discipline
Subject
financial literacy
trust
investment
saving
household portfolios
retirement
pension
Central Provident Fund
Economics
Funder
Grant number
License
Copyright date
Distributor
Related resources
Author
Koh, Benedict S.K.
Mitchell, Olivia S
Fong, Joelle H
Contributor
Abstract

Trust is an essential component of the financial system, and distrust can undermine saving and economic growth. Accordingly, prior research has shown that survey responses to a question about ‘trust in people’ are associated with household willingness to invest in the stock market. Nevertheless, little is known about how trust shapes economic behaviors predictive of retirement preparedness. Our study draws on the Singapore Life Panel (SLP®), a high-frequency internet survey of people age 50-70, to assess how trust ties to older respondents’ (1) pension plan participation and withdrawals; (2) life, health and long-term care insurance purchases; and (3) stock market engagement. We show that the ‘trust in people’ question often used in prior studies is uncorrelated with household behaviors related to retirement preparedness. Nevertheless, trust in financial and public-sector representatives is positively associated with pension savings, investments, and insurance purchases. Financial literacy also has a consistent and important role in explaining who saves for retirement and other economic behaviors driving retirement readiness.

Advisor
Date Range for Data Collection (Start Date)
Date Range for Data Collection (End Date)
Digital Object Identifier
Series name and number
Publication date
2019-02-08
Volume number
Issue number
Publisher
Publisher DOI
Journal Issue
Comments
The research was supported by the Singapore Ministry of Education Academic Research Fund Tier 3 grant (MOE2013-T3-1-009) at the Singapore Management University, the MOE Start-up Grant at the National University of Singapore, and the Pension Research Council/Boettner Center at The Wharton School of the University of Pennsylvania.
Recommended citation
Collection