Focus on Pensions and retirement behavior in a new doctoral dissertation
Amedeus Malisa, Jönköping International Business School (JIBS), defended his doctoral thesis in Economics, “Pensions, retirement behavior and financial fraud victimization” on 14 June.
The thesis explores various aspects of individuals' pension investment and retirement behaviour.
“Population ageing and the ongoing pension reforms pose several societal challenges, especially on pension financing and benefits. Hence, there is a critical need to understand the choice of individual savings, retirement behaviour and the well-being of older populations in financial matters,” says Amedeus Malisa.
The thesis focuses on understanding the individual choice of pension savings, retirement behaviour and the current policy discussions on the design and reforms of pension systems. In the thesis, Amedeus addresses four interrelated questions. How does pension information affect investment behaviour? How do savers respond to information about fraud? To what extent does intelligence relate to pension fraud victimization? And how does becoming a grandparent affect the labour supply of older workers?
The first article investigates how pension communication affects the trading behaviour among pension savers and shows that pension information interventions enhance individuals' interest in pension-related decisions. However, economic relevance is limited due to low general engagement among the savers.
The following two articles exploit a Swedish Premium Pension System (PPS) scenario where some savers were exposed to financial fraud. A primary focus of these articles is to characterize the type of savers who are more susceptible to becoming victimized by fraud, explore the extent they are inclined to become active and divest when fraud allegations become public and the relationship between intelligence and fraud victimization.
“My results show that while individuals who ended up in the fraudulent companies were not socioeconomically different from others, they are more likely to work with financial advisors, some of which steered them into these funds. Intelligence protects against being financially victimized. It is people of low intelligence (who on average earn less, to begin with) who suffer the most, which will translate into widening socioeconomic gaps in retirement,” Amedeus Malisa explains.
The results have several policy implications. First, they show that individuals are vulnerable to mistakes with considerable consequences, thus calling for a better design of the existing pension systems and for strict entry requirements for potential fund providers. Second, as various measures are promoted to induce people to save more, individual differences and behavioural biases may exacerbate the consequences of fraud for individual investors. Third, given the already low activity rates recorded in funded pensions, incidences of fraud may distort people’s trust in the pension system and further amplify the level of inactivity
Finally, the thesis addresses how grand-parenthood shapes labour supply for people close to retirement and its effect on the mobility of households.
“The results show a significant increase in retirements for both grandmothers and grandfathers when their first grandchildren are born. Moreover, people with a child are significantly more likely to move closer to their parents (i.e., the child's grandparents). The results suggest that grandchildren make grandparents less elastic to financial incentives and other regulations that promote longer working lives, even in a country with generous family policies such as Sweden,” says Amedeus Malisa.
After the dissertation, Amedeus Malisa will continue with teaching and doing research. One of his projects will focus on evaluating “minPension's” new tool for pension withdrawals on pension claiming decisions.