Behind the success of dominated personal pension plans: sales force and financial literacy factors

Giuseppe Marotta

Journal of Pension Economics and Finance, 2020, vol. 19, issue 4, 532-547

Abstract: The revealed preference for dominated insurance-based personal pension plans (PPPs) in Italy is a decade-long puzzle. I surmise that a motivation from the supply side is a sales force factor deriving from the geographical distribution of financial providers, including the countrywide network of the state controlled Post Office. I provide supporting evidence using three biennial waves of the Bank of Italy's survey on household finances from 2010 to 2014. The time interval includes a public pension system reform sharply raising the statutory age retirement, legislated in December 2011 to defuse a sovereign debt crisis. I show that the salience effect on the awareness of the benefits of supplementing lower perspective public pensions with PPPs increased the explanatory power of financial strength indicators. Exploiting a module in the 2010 wave I estimate a surprising decrease in the probability of subscription to PPPs in 2014 associated with the indicator for the highest financial literacy level.

Date: 2020
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Working Paper: Behind the success of dominated personal pension plans: sales force and financial literacy factors (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:cup:jpenef:v:19:y:2020:i:4:p:532-547_4

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