The Effect Of Financial Literacy On Personal Retirement Preparation And Commercial Endowment Insurance Decision-making

Since 2014,the proportion of people aged 65 and over in China has exceeded 10%,far exceeding the standard of aging.The phenomenon of population aging has intensified,the old-age dependency ratio has risen,which poses a huge challenge to China's basic social pension insurance.The increase in the maintenance rate of the basic old-age insurance system for urban employees and the decline in the replacement rate of pensions indicate that the level of basic old-age insurance in China is declining.The basic social pension insurance introduced by the government alone cannot solve the problem of residents' old-age care.However,at present,most residents do not make arrangements for future life.Instead,they put the pressure of retirement on the government.Commercial endowment insurance,as an important supplement to the social basic pension insurance,has not been fully developed,didn't play its complementary role.As a major factor affecting individual financial behavior and financial decision-making,financial literacy will also have a major impact on individual pension preparation.Individuals with different financial literacy have different understandings of pension risks and different ability to resist pension risks,individuals' pension preparation behavior,pension responsibility awareness,and choice of commercial endowment insurance will also vary.This paper will from the microscopic point of view explore the impact of financial literacy on personal retirement preparation and commercial endowment insurance decision-making.This paper analyzes the status of financial literacy and the choice of pension preparation for chinese residents in 2018,and finds that the level of financial literacy is not high,and there is a certain gap with other countries;in the choice of various pension preparation methods,the basic social pension insurance is "The solo show",enterprise annuity and commercial pension insurance are developing slowly.Individuals with different financial literacy,the levels of pension prepare perfection,individual pension responsibility,and needs of commercial endowment insurance are different.This paper based on the Chinese Retirement Readiness survey 2018,through the factor analysis method and answering the correct number to construct financial literacy variables,select the age,gender,education level,marital status,health status and family annual income,number of children raised,family live economic zone as control variables,using ordered multi-class regression,OLS regression,probit regression analysis the impact of financial literacy on pension preparation perfection,personal pension responsibility awareness,commercial pension insurance decisions.The article draws the following conclusions:(1)The higher level of financial literacy,the more individuals are actively to preparing for the elderly,and their preparations are more perfect.(2)The Improvement of financial literacy level can enhance the sense of individual pension responsibility,when they in face of pressure,lower dependence on social pension insurance provided by the government.(3)Financial literacy has a significant positive impact on commercial endowment insurance decisions.Individuals with higher financial literacy level tend to choose commercial pension insurance as an important means to effectively supplement future pensions.(4)Among the control variables,the higher the education level,healthier and the higher family's annual income,resulting in the more perfect the pension preparation behavior and the sense of pension responsibility,the more inclined to choose commercial endowment insurance;age,marital status,the number of children raised has a negative impact;the impact of gender and economic zone is not significant.Finally,this paper combines the empirical analysis to make recommendations to government departments,enterprises and residents themselves,hoping to enhance residents' pension preparation.The innovation of this article has two aspects.First,Foreign extensive research literature on financial literacy demonstrated financial literacy is an important factor affecting household asset allocation,stock market participation and retirement planning.However,domestic research on financial literacy is mainly concentrated on family financial allocation,and is less used in related research on pension preparation.This paper studies the impact of financial literacy on pension preparation and commercial endowment insurance decision-making,which can provide a new perspective for the study of financial literacy.Second,there are many articles about China's aging population and fund gaps,but there are few studies on pension planning from the perspective of personal financial behavior.This research is different from the previous research on the issue of pension from the macro policy or institutional level,but from the perspective of personal financial literacy.This article based on the micro and personal level explores the problem of the elderly in China,with a certain degree of innovation.