Limited Understanding of Individual Retirement Accounts among Chileans

Abstract

Chileans with more knowledge about the pension system more actively contribute to and manage their individual retirement accounts. This positive association between system knowledge and retirement saving remains even after controlling for di§erences in other relevant attributes, such as Önancial planning horizon, retirement plan, and risk preference. Furthermore, the members who have the most discretion with their accounts, such as the self-employed, are often the least knowledgeable about the pension system. In general, Chileans report a limited understanding of their retirement account system, and this lack of knowledge appears to impede active decision-making in the system.