Financial Literacy and Pension Investment Decisions

22 Pages Posted: 11 Jul 2011

See all articles by Natalie Gallery

Natalie Gallery

Queensland University of Technology

Gerry Gallery

Queensland University of Technology

Kerry Brown

Queensland University of Technology - School of Management

Craig Furneaux

Queensland University of Technology - School of Accountancy

Chrisann Palm

affiliation not provided to SSRN

Date Written: August 2011

Abstract

The call for enhanced financial literacy amongst consumers is a global phenomenon, driven by the growing complexity of financial markets and products, and government concerns about the affordability of supporting an ageing population. Worldwide, defined benefit pensions are giving way to the risk and uncertainty of defined contribution superannuation/pension funds where fund members now make choices and decisions that were once made on their behalf. An important prerequisite for informed financial decision‐making is adequate financial knowledge and skills to make competent investment decisions. This paper reports the findings of an online survey of the members of a large Australian public sector‐based superannuation fund and shows that although respondents generally understand basic financial matters, on average, their understanding of investments concepts, such as the relationship between risk and returns, is inadequate. These results highlight the need for education programs focusing specifically on developing fund members’ investment knowledge and skills to facilitate informed retirement savings decisions.

Keywords: financial literacy, investment decisions, risk, pension funds, superannuation

Suggested Citation

Gallery, Natalie and Gallery, Gerry Thomas and Brown, Kerry and Furneaux, Craig and Palm, Chrisann, Financial Literacy and Pension Investment Decisions (August 2011). Financial Accountability & Management, Vol. 27, Issue 3, pp. 286-307, 2011, Available at SSRN: https://ssrn.com/abstract=1881425 or http://dx.doi.org/10.1111/j.1468-0408.2011.00526.x

Natalie Gallery (Contact Author)

Queensland University of Technology ( email )

School of Accountancy
GPO Box 2434
Brisbane, Queensland 4001
Australia

Gerry Thomas Gallery

Queensland University of Technology ( email )

School of Accountancy GPO 2434
Brisbane QLD 4001
Australia
61738648347 (Phone)

Kerry Brown

Queensland University of Technology - School of Management ( email )

Brisbane, Queensland 4001
Australia

Craig Furneaux

Queensland University of Technology - School of Accountancy ( email )

2 George Street
Brisbane, Queensland 4000
Australia

Chrisann Palm

affiliation not provided to SSRN ( email )

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