With a possible decline in public pension benefits, private savings will become critical for maintaining desired living standards, yet most people undersave. We focus on one of the possible explanations for this: trust in the state. Using data from a dedicated survey and applying structural equation modeling, this study demonstrates that Polish citizens cherish the unconditional, albeit subconscious, belief in the state as a potential rescuer of last resort in life-threatening situations. This trust plays an essential role in people’s propensity to save for the future. We discuss potential explanations of this phenomenon and its consequences for social policymaking.

In the recent decade, there has been observed across the Central and Eastern European states the regulatory trend towards the increase of the non-financial (first) pension pillar size at the expense of the financial (second) pillar. It tends to question the consequences of this shift for the future retirement benefits. Applying the portfolio approach we address this issue by running a series of simulations to find out how to allocate pension contributions between both pillars in an optimal way. Our study contributes to the existing literature as follows. First, we do not perform the assessment of the predetermined regulatory solutions, but we look for an optimal one. Moreover, we allow our optimal rule to be time-varying, if necessary, which would be a true novelty in this research area. Second, we do not base our estimates on historical trends; rather, we apply the long-term economy’s projection to account for the society’s ageing impact, which is a crucially important factor for the solvency of the pension system. Adapting some of the simulation assumptions to fit the Polish case, our results confirm that current regulations underestimate the role of the capital pillar and the optimal allocation between both pillars should be time-varying.

When examining the role of knowledge in the decision-making process, researchers often measure it through multiple-choice questionnaires, interpreting the number of correct answers as an indicator of knowledge. In this study, we focus on the recognised methodological biases of this approach, recommending alternative ways of modelling the phenomenon of knowledge and its manifestation. We explore several ways in which the knowledge can be structured and interpreted and apply the models to the data from a group of Polish respondents surveyed on financial literacy. These models put into question some of the stylised facts on human knowledge. Particularly, we demonstrate that an alleged gender gap (lower financial knowledge of women compared to men) might be just an artefact, resulting from the oversimplified interpretation of people’s responses in the questionnaires. Finally, our models are not restricted to any specific area of knowledge and can be applied to existing micro-datasets, removing the need for re-surveying. This presents a unique opportunity to re-examine other established stylised facts.

Companies that manage mandatory pension funds are frequently accused of excessive fee taking. International analyses have found that in countries with legal caps, commissions remain within these caps; hence, market competition does not function. Surprisingly, there are few international cases where local regulators implement mechanisms to facilitate competition. The variety of auction mechanisms available raises the question of whether an optimal solution exists for this purpose. Therefore, in this study, we present evidence, based on a controlled regulatory experiment, on the fee-reduction potential of reverse auctions.

The regulatory framework of the Polish pension system is far-removed from the optimal lifecycle portfolio approach, which recommends a time-varying asset mix to minimize portfolio risk. Nevertheless, a question emerges on how large diversification gains can grow under the existing rules. This study accounts for the current restrictions and estimates risk-reduction opportunities under the two-pillar pension system. We compare the outcomes with our previous results for optimal portfolio allocation and, as in the previous study, use a Monte Carlo approach with a copula function to simulate the distribution of replacement rates for the Polish pension system. We conclude that the regulations hinder, to a significant extent, the opportunity to minimize shortfall risks, an unsatisfactory outcome for Polish pensioners.

In this paper, we present the results of financial knowledge assessment from a nationwide survey carried out in Poland in 2019. To measure this phenomenon, we use the well-grounded scale, the ‘Big Three’ financial literacy questions, proposed by Mitchell and Lusardi. The results are similar to those of studies in other countries. However, we find that financial literacy scores poorly predict reasonable answers to the retirement planning question. We present hypotheses to explain this finding and recommend potential solutions.