Filipinos’ Preferences for Employer Retirement Plans

Actuaries have long debated various aspects of the retirement plan, considering both the plan sponsors’ and the participants’ perspectives (Mathew Greenwald and Associates, Inc., 2004). There have been assumptions about how the public felt about these plans but little was known how workers and retirees actually feel about them. This study employed conjoint analysis to examine preferences of Filipino workers and retirees for employer retirement plans. With the participation of 343 parents of financial management students from a Philippine comprehensive university who were residing in different parts of the country, influences of the following variables on retirement plan preferences were identified, namely: attitudes towards retirement savings, financial literacy, behavioral biases and demographic/socioeconomic characteristics. Results show that Filipinos consider Socially Responsible Investing (SRI), a non-financial factor, the most important plan attribute. Interestingly, despite having positive attitudes, the participants’ retirement plan preferences are not significantly affected by them. Moreover, participants exhibited high level of financial literacy and this variable considerably influenced their choice of retirement plan features. Participants are also emotional in making investment decisions and these behavioral biases are not significantly affecting their preferences. Lastly, comparisons among demographic and socioeconomic groups show some significant impact on plan preferences. Extending our understanding to the choices employees and retirees make, as depicted in this study, is not only important to the working population as a whole but also to the employers in making policies involving retirement funding allocation and investment.