The Effects of Compulsory Pension Wealth on the Personal Saving Behavior

Authors

  • Siam Sakaew National Institute of Development Administration
  • Praewpailin Janposri Mahasarakham Business School Mahasarakham University

Keywords:

compulsory pension systems, pension wealth, personal saving behavior

Abstract

Thailand has many compulsory saving schemes for longevity and income uncertainty at old age. A crucial question is whether how saving schemes affect saving behavior. The empirical results of this study found that the present value of the Social Security Fund benefit cannot encourage private employees to save more, although the benefit is insufficient to live after retirement. This is because less additional welfares provided insufficiently.  While the present value of the government pension fund encourages government officials to save more. A reason is due to this compulsory pension provides the opportunity to government officials to save up to 15 percent of their salary, and the return of saving is quite high. Moreover, they have also other welfare benefits that can reduce the cost of living, thus allowing them to save more ultimately. Finally, the present value of the old-age allowance can encourage workers to save more. A possible reason to explain this is that the old age allowance is too low which may insufficient when becomes elderly. As a result, additional voluntary saving is needed in order to increase retirement saving among workers. Therefore, the government should extend the compulsory pension covers to all Thais and create a savings guarantee for the savers to have enough savings to sustain life in old age. Moreover, increase the welfare of private employees equal to government officials in order to reduce daily expenses and have more money to save. 

References

สำนักงานสถิติแห่งชาติ. (2555). รายงานการสำรวจแรงงานนอกระบบ. กรุงเทพฯ: สำนักงานสถิติแห่งชาติ.

สำนักงานสถิติแห่งชาติ. (2557). รายงานการสำรวจประชากรผู้สูงอายุในประเทศไทย. กรุงเทพฯ: สำนักงานสถิติแห่งชาติ.

สำนักงานสภาพัฒนาการเศรษฐกิจและสังคมแห่งชาติ. (2559). การคาดประมาณประชากรของประเทศไทย พ.ศ. 2553-2583.กรุงเทพฯ: สำนักงานสภาพัฒนาการเศรษฐกิจและสังคมแห่งชาติ

Alessie, R., & Angelini, V., & Van Santen, P. (2013). Pension wealth and household savings in Europe: Evidence from SHARELIFE. European Economic Review, 63, 308-328.

Attanasio, O., & Brugiavini, A. 2003). Social Security and Households' Saving. The Quarterly Journal of Economics, 118(3), 1075-1119.

Attanasio, O. P., & Rohwedder, S. (2003). Pension Wealth and Household Saving: Evidence from Pensions Reforms in the United Kingdom. The American Economic Review, 93(5), 1499-1521.

Chen, C. L., Kuan, C. M., & Lin, C. C. (2007). Saving and housing of Taiwanese households: New evidence from quantile regression analyses. Journal of Housing Economics, 16(2), 102-126.

Curley, J., Ssewamala, F., & Sherraden, M. (2009). Institutions and savings in low-income households. Journal of Sociology and Social Welfare, 36(3), 9-32.

Diamond, P. A., & Hausman, J. A. (1984). Individual retirement and savings behavior. Journal of Public Economics, 23(1-2), 81-114.

Engelhardt, G. V., & Kumar, A. (2011). Pensions and Household Wealth Accumulation. Journal of Human Resources, 46(1), 203-236.

Feldstein, M. (1974). Social security, induced retirement, and aggregate capital accumulation. Journal of political economy, 82(5), 905-926.

Feldstein, M., & Pellechio, A. (1979). Social Security and Household Wealth Accumulation: New Microeconometric Evidence. Review of Economics and Statistics, 61(3), 361-368.

Feng, J., He, L., & Sato, H. (2011). Public pension and household saving: Evidence from urban China. Journal of Comparative Economics, 39(4), 470-485.

Gale, W. G., (1998). The Effects of Pensions on Household Wealth: A Reevaluation of Theory and Evidence. The Journal of Political Economy, 106 (4), 706-723.

Horioka, C. Y. (1990). Why is Japan's household saving rate so high? A literature surveys. Journal of the Japanese and International Economies, 4(1), 49-92.

Hubbard, R. G. (1986). Pension Wealth and Individual Savings: Some New Evidence. Journal of Money Credit and Banking, 18(2), 167-178.

King, M. A., & Dicks-Mireaux, L.L. (1982). Asset Holdings and the Life-Cycle. Economic Journal, 92(366), 247-267.

Lusardi, A. (2008, February).Household saving behavior: The role of financial literacy, information, and financial education programs (NBER Working Paper No. w13824). https://www.nber.org/papers/w13824.pdf

Lusardi, A., & Mitchelli, O. S. (2007). Financial literacy and retirement preparedness: Evidence and implications for financial education. Business economics, 42(1), 35-44.

Pan, Y. (2016). Understanding the rural and urban household saving rise in China. Regional Science and Urban Economics, 56, 46-59.

Renneboog, L., & Spaenjers, C. (2012). Religion, economic attitudes, and household finance. Oxford Economic Papers, 64(1), 103-127.

Sirisankanan, A. (2013). Consumption smoothing and precautionary savings in Thai agricultural households. Thailand and The World Economy, 31(2), 37-63.

Zeldes, S. P. (1989). Consumption and liquidity constraints: an empirical investigation. Journal of political economy, 97(2), 305-34

Downloads

Published

2022-12-23

How to Cite

Sakaew, S. ., & Janposri, P. (2022). The Effects of Compulsory Pension Wealth on the Personal Saving Behavior. Business Administration and Management Journal Review, 14(2), 7–26. Retrieved from https://so01.tci-thaijo.org/index.php/bahcuojs/article/view/228050

Issue

Section

Research Articles