The Impact of Supplementary Pension on Household Risky Financial Asset Allocation

Abstract

With increasingly serious aging problem in China, supplementary pension, as the second pillar of the endowment insurance system, is expected to play an important role to relieve the pension pressure. Nowadays, people in China are exposed to various investment tools, but they still prefer to invest in risk-free financial assets. The allocation of household financial assets is not diversified enough. While supplementary pension is expected to improve financial structure of households. It may enhance the anti-risk ability of households, rational allocation of household assets, the ability of value-adding, and thus reduce the pressure of society to cope with the aging population. This paper selects the 2019 China Household Finance Survey (CHFS) database, using STATA software to investigate the impact of supplementary pension on risky financial asset allocation of Chinese households by applying probit and tobit models. The results show that supplementary pension can significantly increase the willingness of households to purchase risky financial products but has no significant effect on increasing the proportion of risky assets being held.