Wharton Pension Research Council Working Papers

Document Type

Working Paper

Date of this Version



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.


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.


financial literacy, trust, investment, saving, household portfolios, retirement, pension, Central Provident Fund

JEL Code

D14, E21, G11, J32

Working Paper Number


Copyright/Permission Statement

All opinions are solely those of the authors. © 2019 Koh, Mitchell and Fong. All rights reserved.


The authors acknowledge excellent programming assistance from Yong Yu and the Singapore Life Panel (SLP®) team at Singapore Management University, as well as the RAND SLP® team.

Included in

Economics Commons



Date Posted: 12 February 2019