Abstract
Pension finance literacy enables individuals to plan for retirement, make proper choices on pension products and contribute effectively in management of their pension schemes. This study sought to determine the pension finance literacy levels and the variables that influence it amongst members of occupational retirement schemes in Kenya. The sample consisted of 2395 (response rate 65%) individuals drawn from 648 occupational retirement schemes. A binary measure of pension finance literacy was constructed and one way ANOVA and post hoc tests using the Tukey approach were conducted to determine the bases on which pension finance literacy levels differ. The study concludes that pension finance literacy differs significantly on the basis of age, education level, gender, job experience, management level, income, pension plan design, participation in previous pension finance literacy program, area of specialization and membership in a pension plan board but does not differ on the basis of the marital status of the individuals.
Highlights
M array of financial products, low levels of financial literacy prevents consumers from making good decisions on financial products and pension systems (Lusardi & Mitchell, 2006; OECD, 2008; James, 2009; Lusardi, Mitchell & Curto, 2010)
The present study investigates the predictors of pension finance literacy amongst members of retirement schemes in Kenya
The results indicate a normal distribution that is slightly skewed to the right. 4.3 Determinants of Pension Finance Literacy One way Anova results in table 3 show significant differences in the pension finance literacy levels on the basis of education level, gender, management level, income, pension plan design, participation in previous finance education, and membership in a pension plan board (α < 0.01) while age, job experience and area of specialization were significant at α < 0.05
Summary
M array of financial products, low levels of financial literacy prevents consumers from making good decisions on financial products and pension systems (Lusardi & Mitchell, 2006; OECD, 2008; James, 2009; Lusardi, Mitchell & Curto, 2010). Financial literacy surveys indicate inadequate pension finance literacy levels amongst the general population. The inimitable nature of pension arrangements and the consequent low level of awareness underscore the importance of pension finance literacy. The present study investigates the predictors of pension finance literacy amongst members of retirement schemes in Kenya. The findings will inform policy makers in the design of pension finance literacy programs as Kenya prepares a national financial literacy strategy. This paper is organized as follows; section 2 provides a literature review, section 3 discusses the research methodology, section 4 discloses the results of the statistical analyses of the data and the consequent discussion of the results while section 5 concludes
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