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Pension scheme trustees as surrogate decision makers

Weiss-Cohen, L., Ayton, P. ORCID: 0000-0003-2285-4608, Clacher, I. & Thoma, V. (2022). Pension scheme trustees as surrogate decision makers. Finance Research Letters, 44, article number 102043. doi: 10.1016/


Pension trustees make surrogate decisions on behalf of scheme members. However, prior research has not explored how this might affect pension adequacy. Our results show that when setting targets for pension replacement income, trustees project their own preferences instead of reflecting member preferences. Furthermore, projection was more pronounced for trustees with lower financial literacy. Trustees choose significantly higher pension replacement rates for members than members choose for themselves. Trustees also choose replacement rates higher than current benchmarks. The economic consequences are potentially considerable, due to high levels of pension contributions and incompatible risk-taking. A better understanding of the dynamics of decisions made by trustees is needed to ensure better member outcomes.

Publication Type: Article
Additional Information: © 2021. This manuscript version is made available under the CC-BY-NC-ND 4.0 license in new tab/window)
Publisher Keywords: behavioral finance; decision-making; pensions; trustees; surrogate decisions; financial literacy
Subjects: H Social Sciences > HG Finance
Departments: School of Health & Psychological Sciences > Psychology
SWORD Depositor:
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Text - Accepted Version
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