Abstract
Research background: Preparation for retirement is a major concern for the people in the workforce as they have to encounter considerable difficulties in making the right investment decisions for their retirement.
 Purpose of the article: This research extends the literature on personal finance by investigating the impact of both financial literacy levels and pension knowledge on employees? investment choice decision for their retirement, while in previous literature the role of these factors has mainly been explored separately. 
 Methods: To conduct the research, a survey questionnaire was applied to collect data in three main regions of Vietnam comprising Northern, Central and Southern Vietnam. Data collection was made in 2018, in which 427 valid questionnaires were used for data analysis from 700 questionnaires. Two estimation methods are employed for analysis in this study, including a linear probability model (LPM) and two-stage least squares (2SLS) model. The findings of this research remain significant after the Two-Stage Least Squares (2SLS) regression model is used as an estimation technique to eliminate potential bias caused by endogenous problems.
 Finding & Value added: The results show that basic financial literacy level and pension knowledge are principal factors which significantly increase the probability of exercising retirement investment choice of employees, while advanced financial literacy level factor has a significant effect on choosing growth investing options for their retirement. Further, this research finds that there is no correlation between employees? financial risk tolerance and their retirement investment choice. Furthermore, the study proposes and offers new evidence that pension knowledge is a decisive factor providing employees with encouragement to exercise retirement investment choice and those who consult with financial advisors tend to take part in growth investing option.
Highlights
Over two decades, the 1990s and 2000s, many countries made public pension benefits more actuarially equitable and more closely connected to working histories
Based on the literature review and informed choice model which was proposed by Brown et al (2002), this study develops and proposes a conceptual framework which examines the disparities in how employees who have and have not exercised choice make retirement investment decisions for their retirement
Two-Stage Least Squares (2SLS) regression produces the results that basic financial literacy and pension knowledge are positively correlated with retirement investment choice decision-making
Summary
The 1990s and 2000s, many countries made public pension benefits more actuarially equitable and more closely connected to working histories. At the same time, when the pension reform process shifts defined-benefit (DB) to defined-contribution (DC) plan, it requires individuals to take more responsibility for their financial well-being. In these extensive changes, individuals have to take financial decisions such as savings, investment, and wealth accumulation by themselves. The government may reduce the burden of funding social benefits, while individuals have more obligations to make plans and decisions for their retirement, depending on their specific circumstances. The reforms have led to less liberal future pensions and caused more difficulties for individuals to understand. In order to prepare for their retirement, working people have to encounter increasing difficulties in choosing the most efficient ways to make the right decisions and considering the most suitable decisions for their specific situation
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