“Financial knowledge has no significant influence on the examined pension behaviors”

What is the focus of the paper?

This study tested whether a measurement scale for ‘general financial inertia’ (the tendency to be inactive in financial decision-making) is related to:

  • the extent to which pension information was sought in the past year; 
  • to intentions in this area for the upcoming year; and 
  • to the search for information about the new pension system.

What are the key findings?

The results show that general financial inertia, assessed with the Financial Inertia Scale, is related to specific pension decisions. Participants with a higher degree of financial inertia were less likely to gather pension information in the past year, made fewer changes to their pension, and were less engaged with the new pension system. They also indicated that they were less inclined to seek information or make adjustments in the next year. In addition to financial inertia, other factors influence pension behaviors. Participants who actively build additional pension savings and those with larger households are more engaged with pensions. Interestingly, individuals with high financial inertia seem to recognize that they are not well-prepared, yet they still take no action.

What are the implications?

  • The Financial Inertia Scale (both the full and shortened versions) can help identify individuals who may be inactive in pension decisions as well as in other financial decisions.  
  • The Financial Inertia Scale can be used to support this vulnerable group.  
  • Campaigns can help prevent the postponement of financial decisions.