Behavioural Biases in Investment Decisions of Pension Savers: Evidence from the 2nd Pillar of the Pension System in Slovakia

Abstract The paper investigates the risk aversion and decision-making of pension fund investors within the investment pillar of the Slovak pension system. The default strategy of the investment pillar of the Slovak pension system was based on a conservative, guaranteed bond portfolio, between 2012–2023, which is not an optimal strategy for virtually any investor. A sample of the economically active population under the age of 50 was used to study how personality traits, sociodemographic and economic characteristics influence risk aversion and inertia among pension investors within the context of a bond portfolio default strategy. This represents a unique framework, which to the best of our knowledge, has not been replicated elsewhere. The analysis is based on the sample of 100 respondents. The data were collected by a professional survey agency. The results show that the personality traits of agreeableness and conscientiousness are associated with higher risk aversion, while openness to new experiences is associated with lower risk aversion. Agreeable people were less likely to opt out of the default investment strategy. Individual characteristics, such as gender, age, and mother's education, increased reluctance to opt out of the default investment strategy. On the contrary, individuals whose parents invest were more likely to opt out of the default investment strategy.