Investors’ Activity in Response to Information About Their Pensions
By Amedeus Malisa
This paper uses individual-level data on fund choices in the Swedish Premium Pension to analyze how investors respond to information about their pension savings. The Swedish Pensions Agency mails an annual information letter, the Orange Envelope, to investors to provide them with tailored information about their public pension accounts. This paper examines the effect of pension communication in the Swedish Premium Pension System (PPS) by exploiting the staggered roll-out of these letters across different Swedish counties. Results show that the letters significantly increase investors trading activity in PPS. However, their economic relevance is limited because most savers are passive. The proportion of individuals who make changes to their funds in PPS because of the information letters is only about 3.57 percent. Moreover, the effect is more prominent among active investors with higher cognitive abilities. These findings suggest that providing communication about pensions may help increase individuals’ interest in pension-related decisions but not for less engaged investors.
Source @PaperSSRN
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