Journal of Pension Economics and Finance


Financial literacy and retirement planning: the Russian case*


a1 The World Bank (e-mail:

a2 Essex Business School, University of Essex (e-mail:


We examine the relationship between financial literacy and retirement planning in Russia, a country with a relatively old and rapidly ageing population, large regional disparities, and emerging financial markets. We find that only 36% of respondents in our sample understand interest compounding and only half can answer a simple question about inflation. In a country with widespread public pension provisions, we find that financial literacy is significantly and positively related to retirement planning involving private pension funds. Thus, along with encouraging the availability of private retirement plans, efforts to improve financial literacy can be pivotal to the expansion of the use of such funds.

(Online publication October 11 2011)


  • D91;
  • G11;
  • G23

Key Words:

  • Financial literacy;
  • retirement planning;
  • pensions;
  • Russia


* We thank Annamaria Lusardi and Audrey Brown for invaluable guidance; Raffaele Miniaci and Luc Arrondel for excellent discussion; Andrei Markov, David McKenzie, Martin Melecky, and Sue Rutledge, and seminar participants in CeRP's Financial Literacy around the World (Flat World) Workshop and the Ninth International Workshop on Pension, Insurance and Saving at Université Paris-Dauphine for valuable comments. Ed Al-Hussainy, Teresa Molina, and Douglas Randall provided outstanding research assistance. Financial assistance from Netspar and the World Bank Development Research Group is gratefully acknowledged. This paper's findings, interpretations, and conclusions are entirely those of the authors and do not necessarily represent the views of the World Bank, their Executive Directors, or the countries they represent.