The Role of Asset Allocation Decisions in Planning for a Private Pension: The Case of Slovenia

Economic and Business Review, Vol. 15, No. 2, 2013

34 Pages Posted: 21 Sep 2016

See all articles by Ales S. Berk

Ales S. Berk

SEB LU / University of Ljubljana - School of Economics and Business

Mitja Cok

University of Ljubljana - Faculty of Economics

Marko Kosak

University of Ljubljana - Faculty of Economics

Joze Sambt

University of Ljubljana - Faculty of Economics

Date Written: September 19, 2016

Abstract

Current demographic dynamics driven by low fertility and increasing longevity requires adjustments of the traditional frameworks of providing pensions. In this article we highlight three crucial issues policymakers should address by implementing those adjustments. First, fiscal limitations given the current and projected demographic dynamics will dramatically reduce PAYG pensions. Without sufficient savings during the active period, individuals will increasingly end up in poverty. Their savings will not be enough to support their desired consumption in old age. Second, we highlight the impact of the asset allocation decision and the general public’s related lack of awareness on this issue. Therefore, we argue that financial illiteracy about both required savings and about decisions on appropriate asset class play a significant role in determining the well-being of masses in the not-so-distant future. Third, we argue that shift towards private pension away from the PAYG is expected to come with substantial benefits stemming from diversification among conceptually different sources of pension income.

Keywords: PAYG, private pensions, nancial literacy, old-age income, risk diversi cation, transition economics

JEL Classification: J14, G11

Suggested Citation

Berk, Ales S. and Cok, Mitja and Kosak, Marko and Sambt, Joze, The Role of Asset Allocation Decisions in Planning for a Private Pension: The Case of Slovenia (September 19, 2016). Economic and Business Review, Vol. 15, No. 2, 2013 , Available at SSRN: https://ssrn.com/abstract=2840801

Ales S. Berk (Contact Author)

SEB LU / University of Ljubljana - School of Economics and Business ( email )

Kardeljeva ploscad 17
Ljubljana, 1000
Slovenia

Mitja Cok

University of Ljubljana - Faculty of Economics ( email )

Kardeljeva ploscad 17
Ljubljana, 1000
Slovenia

Marko Kosak

University of Ljubljana - Faculty of Economics ( email )

Kardeljeva ploscad 17
Ljubljana, 1000
Slovenia

Joze Sambt

University of Ljubljana - Faculty of Economics ( email )

Kardeljeva ploscad 17
Ljubljana, 1000
Slovenia

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