Faculty of Economics and Business Administration Publications Database

Why do Households Leave Money on the Table? The Case of Subsidized Pension Products

Meyll, Tobias
Pauls, Thomas
Walter, Andreas
Link External Source: Online Version
Year: 2019
Keywords: Household finance; Financial advice; Financial literacy; Risk attitude; Savings and investment behavior

Many individuals only save money in their savings account for their old-age provision rather than investing in more profitable asset classes. That is despite the existence of subsidized pension products, for which smallest contributions can be made monthly, which guarantee the capital preservation, and which offer higher expected returns than saving money in bank deposits. We investigate the determinants that affect individuals’ decision to leave money on the table by not investing in subsidized pension products. Our results show that financial literacy and financial advice are positively related to holding such pension products. In that, our results emphasize the role of financial literacy and financial advisors for sound financial decision-making in increasingly complex financial markets.