Predicting pension beneficiaries’ behaviour when offered a socially responsible and impact investment portfolio

ABSTRACT

In recent years, financial and demographic conditions, including low interest rates and volatile equity markets, have been testing the endurance of pension systems. Concern about the sustainability of pension systems has prompted discussion about introducing individual choices under the collective choice mandate. An ongoing discussion seeks to provide more freedom of choice and to shift towards a more individualized risk system within the collective mandate. This suggested individualization will increase operational costs but aims to keep pensions at current levels by shifting risk onto employees. Following the theory of planned behaviour (TPB), the objective of this paper is to examine pension beneficiaries’ intention to adopt a portfolio consisting of socially responsible and impact investments. We employ confirmatory factor and regression analyses to better understand pension beneficiaries’ attitudes, social norms, perceived consumer effectiveness, and intentions for such a choice. Responses from 637 respondents from a Dutch pension administrative organization were collected and identified as a valid sample. Consistent with the theory, the results of our analysis revealed that attitudes and social norms positively affected individuals’ intention to invest in this specific portfolio. Furthermore, we expand our model and incorporate perceived consumer effectiveness and consumer confidence as important factors influencing and moderating socially responsible behaviour, respectively. Our results imply that understanding the behavioural determinants affecting pension beneficiaries’ intentions can be an effective tool for increasing their involvement in pension affairs by making their own choices. Our findings yield policy recommendations for stimulating socially responsible investment behaviour in pension beneficiaries by examining the determinants of human behaviour.

KEYWORDS:

• Impact investment
• sustainable investment
• social responsible investment
• SRI
• TPB
• perceived consumer effectiveness
• confidence
• cooperatives
• pension funds

JEL Codes:

• D12
• G11
• H55
• J32

Acknowledgement

We would like to thank the editor, Olaf Weber and the two anonymous referees for their constructive and valuable comments.

Disclosure Statement

No potential conflict of interest was reported by the authors.

ORCID

George Apostolakis http://orcid.org/0000-0003-3578-1807

Notes

1 PGGM is an asset pension fund administrative organization. It has a cooperative structure with approximately 600,000 members in the healthcare sector and operates as a non-profit institution. It manages the assets of the Stichting Pensioenfonds Zorg en Welzijn pension fund, which is the second-largest pension fund in the Netherlands, with approximately 180 billion euros under management.

2 The decision to introduce a level of sacrifice for this choice was made by consulting pension fund managers and the literature, see Borgers and Pownall (2014).

3 The items in the questionnaire.

4 See in the appendix for the excluded items.