Determinants of participation in voluntary defined contribution pension schemes with special reference to the national pension system

Abstract

The current demographic dividend of India s young workforce may create huge social and newlinefinancial pressure in the future. The debate over pension and social security has emerged as newlineone of the most pressing policy challenges in both rich and developing nations. The newlinecombination of reduced fertility and longer life expectancy will result in a bigger percentage newlineof the aged in the overall population in the future. A large number of elderly persons will newlinehave to rely on fewer working individuals, putting strain on both the family and the newlinegovernment support system. The critical need for change in the pension system cannot be newlineruled out, as many households may be unable to shoulder the rising load. newlineStudy s main aim was to find answers for What are the factors that influence participation in newlinevoluntary Defined Contribution schemes? Researchers carefully explored theories related to newlinepersonal savings, investment and behavioural aspects. The Literature review helped the newlineresearcher to identify major variables, namely Financial Knowledge and Financial Planning newlineSubjective Norms, Personal Conflict and Pension Saving behaviour. Proposed hypothysed newlineframework was tested with data collected through a structured questionnaire using Structural newlineEquation Modelling. It is evident from the current study that Financial Knowledge, Financial newlinePlanning and Subjective Norms positively impact Pension Savings, whereas Personal newlineConflict negatively influences Pension Savings. Current study also observed Financial newlineKnowledge mediates Financial Planning and Pension Savings. newlineThis study produced various outcomes that may be useful to many stakeholders. Pension newlineservice providers, policymakers and the Government should come up with more focused and newlinespecific strategies to encourage Indians to enroll for Voluntary Defined Contribution Pension newlineSchemes. The study also demonstrated how demographic characteristics affect pension newlinesavings, which will assist service providers in tailoring their products to certain groups.