Finnish Entrepreneurs and Their Perception of Sufficiency of Retirement Insurance Contributions

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Title: Finnish Entrepreneurs and Their Perception of Sufficiency of Retirement Insurance Contributions
Author: Mostýnová, Michaela
Other contributor: Helsingin yliopisto, Valtiotieteellinen tiedekunta
University of Helsinki, Faculty of Social Sciences
Helsingfors universitet, Statsvetenskapliga fakulteten
Publisher: Helsingin yliopisto
Date: 2019
Language: eng
Thesis level: master's thesis
Degree program: Taloustieteen maisteriohjelma
Master's Programme in Economics
Magisterprogrammet i ekonomi
Specialisation: Taloustieteen yleinen opintosuunta
General track
Allmänna studieinriktningen
Abstract: In Finland, entrepreneurs (both employers and self-employed) are, compared to salaried employees, free to increase their compulsory retirement insurance contributions to the public pension fund; this being an alternative to additional saving for retirement in private pension funds. This thesis seeks to identify and further examine factors which supposedly influence entrepreneurs‘ perceived sufficiency of their retirement insurance payments . The purpose is to subsequently recommend retirement policy designs which would incentivize Finnish entrepreneurs to increase their contributions to the public pension fund. The empirical section of this work was conducted on a sample of 2 294 entrepreneurs (1 533 self-employed and 761 employers) who took part in the 2017 Labor Force Ad hoc Survey on Entrepreneurship carried out by Statistics Finland. The initial hypotheses gave rise to four categories of variables, presumably affecting sufficiency of retirement insurance contributions perceived by the study sample; namely, ’Personal characteristics & Business background’, ’Motivation’, ’Future perspectives’ and ’Job satisfaction & excitement’. The obtained results suggest that the majority of the selected variables have an effect on entrepreneurs’ perceived sufficiency of their pension insurance contributions. Besides, the factors identified as negatively affecting the perceived sufficiency of retirement insurance payments were more frequently present in the group of self-employed compared to the group of entrepreneurs (employers). Therefore, it is expected that the self-employed are more prone to pay themselves insufficient pension insurance contributions. However, all these factors are considered as incorrigible since they stem from the very nature of complex human behaviour. In this sense, the behavioural approach seems to be highly relevant when forming retirement insurance policies seeking to encourage prudent saving behaviour. This study applies an alternative approach of behavioural economics to the problematics of retirement saving. The first part of the thesis outlines foundations of behavioural economics which serve as a theoretical background for further analyses. For instance, propositions of procrastination, self-control and mental accounting are discussed.
Subject: retirement saving
pension insurance
behavioural economics
public policy

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