Individual Pension Plans in Spain: How Expected Change in Future Income and Liquidity Constraints Shape the Behavior of Households

Moreno‐Herrero, Dolores; Velasco, Manuel Salas; Sánchez‐Campillo, José

doi:10.1007/s10834-017-9526-7

Cited by 15 publications

(15 citation statements)

References 51 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…Similarly, Foster and Smetherham (2013) highlight that as income increases, individuals have more disposable income, as well as more opportunity to save money through private retirement accounts. Recently, Moreno-Herrero et al (2017) found that the expectations of lower future income influence the likelihood of having a private pension plan and thus, not only available income seem to influence subscription to an individual pension plan, but also expected income.…”

Section: Literature Overviewmentioning

confidence: 99%

Financial planning for retirement: the role of income

Búa

Rey‐Ares

Lado-Sestayo

et al. 2019

IJBM

View full text Add to dashboard Cite

PurposeThe purpose of this paper is to study the driving forces of both the decision to participate in individual pension plans and the amount of money allocated to such plans. Moreover, this paper evaluates the potential role that income plays, which has not previously been considered in depth in the financial literature.Design/methodology/approachBased on a sample of the Spanish population over the period 2008–2015, this paper estimates probit and tobit models, using 165,791 observations. The driving forces of private retirement savings comprise demographic, financial and socio-economic characteristics.FindingsThis paper confirms the impact of socio-demographic and economic variables on participation and monetary contributions to pension plans. It also confirms that income plays a non-negligible role. Moreover, empirical evidence reveals that the effect of gender is related to the income stratum to which the individual belongs.Originality/valueRetirement planning plays a key role in retirees’ future income and several countries have emphasised the importance of private individual savings to supplement the minimum provided by public pension schemes. The previous literature has concluded that those who plan their retirement end their working lives with three times the wealth of non-planners. Consequently, analysis of whether people are saving enough for their retirement can contribute to avoiding future wealth inequalities among retirees. Spain is one of the countries with the greatest inequality in income distribution, so this issue is of even greater interest.

show abstract

Section: Literature Overviewmentioning

confidence: 99%

Financial planning for retirement: the role of income

Búa

Rey‐Ares

Lado-Sestayo

et al. 2019

IJBM

View full text Add to dashboard Cite

show abstract

“…Empirical evidence partially confirms the positive effect of household income and net wealth on supplementary pension schemes' participation. Analogous effect in sign is the one exerted by mortgage charges (Moreno-Herrero et al, 2017;Torricelli et al, 2016), which might be due to the potential learning effects that benefit those people who deal with mortgage payments or to the fact that many banks in Spain improve mortgage conditions when people hiring them also contract a life insurance or an individual pension plan. Education level and verbal fluency seems to increase the probability of saving for long-term investment, similar effect to the one detected for those people with the highest numeracy levels.…”

Section: Multivariate Analysismentioning

confidence: 99%

The early bird catches the retirement savings

Rey‐Ares

López

Búa

et al. 2019

QRFM

View full text Add to dashboard Cite

Purpose This paper aims to investigate whether individuals’ planning horizon influences their decision to save privately for their retirement. Design/methodology/approach Focussing on Spain, this empirical research uses the fifth wave of the Survey of Health, Ageing and Retirement in Europe (SHARE)[1]. Logit models are estimated considering variables related to demographic characteristics, economic situation, education and cognitive abilities and psychological and social factors. Findings The results confirm that the planning horizon significantly influences the decision to save for retirement. Long-term planners are more likely to save for retirement than short-term planners. Originality/value Although previous literature has identified the planning horizon as a relevant variable in the decision to save for retirement, few empirical studies have evaluated their impact. This paper shows that it is important to develop habits of financial planning in societies, especially in societies with a prominent orientation towards the present.

show abstract

“…The research work of Medeiros and Correia (2017) on ownership of individual retirement accounts identified income as playing an important role in individuals' savings decision-making. Moreno-Herrero et al (2017) studied individual pension plans in Spain and identified income to be a strong predictor of individual participation in supplementary pension schemes. Self-employed workers with greater income are expected to save more than those with lower income (Torricelli et al , 2016).…”

Section: Determinants Of Retirement Planningmentioning

confidence: 99%

Financial planning for retirement of self-employed workers in the Ghanaian economy

Ofori¹

2021

IJSE

View full text Add to dashboard Cite

PurposeThe purpose of this study was to ascertain the types of financial plan Ghanaian self-employed workers have towards their retirement, and the main forces that motivate these workers to financially plan for their pension.Design/methodology/approachThe study focused on self-employed workers aged from 15 to 60 years. Questionnaires were administered in gathering data for the study. The researcher used probit model in analysing the driving forces behind self-employed workers' financial planning for retirement.FindingsThe study revealed that bank/credit union/savings and loans savings, building of apartments for renting, investment in SSNIT pension, investment in treasury bills/fixed deposits, investment in ownership of business and private insurance pension are the types of financial plan that exist for self-employed workers towards their retirement. The study found that age, marital status, level of education, household size, number of children, renting a house, life style of the future retiree, income, risk level of job and types of retirement plan are the driving forces behind the retirement plans of self-employed workers.Practical implicationsUsing the identified types of financial plan and driving forces in this study, governments in the developing countries can develop and implement self-employed pension schemes, educate and encourage more self-employed workers to plan for their retirement.Originality/valueAnalysing the driving forces behind retirement plans of self-employed people in developing economies.

show abstract

Individual Pension Plans in Spain: How Expected Change in Future Income and Liquidity Constraints Shape the Behavior of Households

Cited by 15 publications

References 51 publications

Financial planning for retirement: the role of income

Financial planning for retirement: the role of income

The early bird catches the retirement savings

Financial planning for retirement of self-employed workers in the Ghanaian economy

Contact Info

Product

Resources

About