Financial Literacy and Pension Planning – A Comparative Study for Austria and Switzerland

This paper analyzes the impacts of financial literacy on pension planning in Austria and Switzerland. Based on survey data of 442 individuals, we explain the pension planning behavior by the level of financial literacy as well as other relevant person- and country-specific characteristics considering in particular the differences between the Austrian and the Swiss population in terms of financial literacy, contextual and socio-demographic aspects. Our results show that higher financial literacy has a clear positive impact on the level of pension planning, whereas the Swiss population is demonstrated to be more financially literate and thus better prepared for the retirement than Austrians. The same holds for elder people compared to the younger persons and men compared to women in our sample. Overall, our results provide some potentially interesting insights on the impacts of institutional differences and financial literacy on pension planning and appear to be highly relevant in light of demographic and system changes as well as the micro- and macro-economic relevance of pension savings in both countries.