Weiss-Cohen, L orcid.org/0000-0001-6355-9619, Ayton, P orcid.org/0000-0003-2285-4608, Clacher, I orcid.org/0000-0002-8892-6697 et al. (1 more author) (2022) Pension scheme trustees as surrogate decision makers. Finance Research Letters, 44. 102043. ISSN 1544-6123
Abstract
Pension trustees make surrogate decisions on behalf of scheme members. However, prior research has not explored how this might affect pension adequacy. Our results show that when setting targets for pension replacement income, trustees project their own preferences instead of reflecting member preferences. Furthermore, projection was more pronounced for trustees with lower financial literacy. Trustees choose significantly higher pension replacement rates for members than members choose for themselves. Trustees also choose replacement rates higher than current benchmarks. The economic consequences are potentially considerable, due to high levels of pension contributions and incompatible risk-taking. A better understanding of the dynamics of decisions made by trustees is needed to ensure better member outcomes.
Metadata
Item Type: | Article |
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Authors/Creators: |
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Copyright, Publisher and Additional Information: | ©2021 Published by Elsevier Inc. This is an author produced version of an article, published in Finance Research Letters. Uploaded in accordance with the publisher's self-archiving policy. |
Keywords: | behavioral finance; decision-making; pensions; trustees; surrogate decisions; financial literacy |
Dates: |
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Institution: | The University of Leeds |
Academic Units: | The University of Leeds > Faculty of Business (Leeds) > Accounting & Finance Division (LUBS) (Leeds) The University of Leeds > Faculty of Business (Leeds) > Management Division (LUBS) (Leeds) > Management Division Decision Research (LUBS) |
Depositing User: | Symplectic Publications |
Date Deposited: | 12 Apr 2021 14:47 |
Last Modified: | 28 Jun 2022 14:23 |
Status: | Published |
Publisher: | Elsevier |
Identification Number: | 10.1016/j.frl.2021.102043 |
Open Archives Initiative ID (OAI ID): | oai:eprints.whiterose.ac.uk:172923 |