Behavioural Biases and Pension Investment Decisions: Evidence from Employees in Kerala

Pension investment decisions are often influenced by psychological tendencies rather than purely rational financial reasoning. This study examines the role of five key behavioural biases overconfidence, loss aversion, present bias, anchoring, and herding in shaping pension investment behaviour among employees in Kerala. Using a structured questionnaire and responses from 100 participants, the study employs descriptive statistics and correlation analysis used to analyse the relationship between these biases and pension investment behaviour, including contribution levels, plan participation, and fund selection. The findings reveal that all five behavioural biases overconfidence, loss aversion, present bias, anchoring, and herding are significantly present among employees in Kerala with respect to pension investment decisions. However, among individual predictors, present bias showed a significant negative impact on pension investment behaviour, while overconfidence, loss aversion, anchoring, and herding biases were not significant. The results further reveal a significant variation in the strength of behavioural biases, with overconfidence and herding emerging as the most dominant factors influencing pension investment decisions among employees in Kerala.