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Optimal decisions on pension plans in the presence of financial literacy costs and income inequalities

Lorenzo Corsini () and Luca Spataro ()

MPRA Paper from University Library of Munich, Germany

Abstract: Pension reforms are on the political agenda of many countries. Such reforms imply an increasing responsibility on individuals’ side in building an efficient portfolio for retirement. In this paper we provide a model describing workers’ choices on the allocation of retirement savings in presence of a) mandatory contribution; b) portfolio decision; c) financial literacy costs. In particular, we characterise the results both from a positive and normative standpoint, by highlighting the determinants of the individual’s choice, with special focus on financial literacy costs and wage level inequalities and by characterizing the optimal contribution rate to mandatory complementary pension schemes.

Keywords: Financial literacy; Choice on pension Plans; Optimal portfolio composition; Income inequality. (search for similar items in EconPapers)
JEL-codes: G11 H55 G23 D91 (search for similar items in EconPapers)
Date: 2011
New Economics Papers: this item is included in nep-age and nep-mic
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:30946

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