Readability, efficiency and costliness of individual retirement products in Poland

Authors

DOI:

https://doi.org/10.24136/eq.2021.002

Keywords:

supplementary pension system, retirement products, costliness of pension plans, readability of financial products, efficiency of retirement products

Abstract

Research background: The role of supplementary pension systems in providing adequate income in old-age is increasing significantly. They are frequently analysed, but rather in terms of architecture, product forms, assets under management or tax incentives than in terms of their efficiency, costliness or readability for individuals.

Purpose of the article: The first aim of this paper is to evaluate individual retirement products in Poland regarding their linguistic readability and transparency, investment efficiency and costliness. Moreover, we examine whether there is any correlation between the analyzed characteristics of contracts that would suggest an intentional strategy by financial institutions to hide low efficiency and high costs. The second aim of the article is to assess which individual retirement products are similar to each other and which are significantly different. The research covers two types of individual retirement products (IKE and IKZE) offered at the beginning of 2017.

Methods: We used the ?Jasnopis? linguistic analysis tool to assess the difficulty level of the language used in the contracts and we conducted desk-research to analyse their transparency. We indicated the costliness and efficiency of the products by calculating the 5-year cost ratios and real average 5-year rates of return. To examine the relations between the characteristics of pension contracts, we used the Spearman's rank correlation coefficient and then verified its significance with a non-parametric test. Moreover, to identify groups of products that are similar to or different from each other, Ward's method was used. The study includes nearly 90% of  all individual retirement products offered in Poland.

Findings & value added: For both types of retirement products studied (IKE and IKZE), we found that the more readable a contract is, the higher its rate of return is and the higher the costs charged are. Moreover, the more readable a contract is, the more transparent it is. The findings of the study provide financial institutions, the supervisor and creators of social policy with information on market imperfections and recommendations how to improve the individual retirement products offered on the market. Our research makes a unique contribution to the multidimensional research of supplementary pension systems. It also develops the understanding of how to successfully use linguistic tools in complex analyses of financial services. The results of the hierarchical cluster analysis proved that both IKE and IKZE products differ substantially and their features generally do not depend on the type of the financial provider.

Downloads

Download data is not yet available.

References

Adamska-Mieruszewska, J., & Mosionek-Schweda, M. (2015). Individual pension saving plans in the context of savings tendencies in Poland. Praca i Zabezpieczenie Społeczne, 8, 3?19.
View in Google Scholar

Allgayer, S., Christoff, L., Davydoff, D., Gabaut, L., Hagen, J., Houdmont, A., Klages, M., Mączyńska, A., Mujagić, E., Nielsen, M., Prache, G., Toscano, A. R., Rutecka-Góra, J., Šebo, J., Vial, M., & Voicu, ?. (2017). Pension savings: the real return. 2017 edition. Brussels: Better Finance. Retrieved from https://betterfinance.eu/wp-content/uploads/publications/Pension_Report_2017 _-_Full_Report_-_Online_Version.pdf (10.03.2020).
View in Google Scholar

Andersen, C., Christoff, L., Davydoff, D., Diaz, M., Gabaut, L., Hagen, J., Herrero, F., Houdmont, A., Mączyńska, A., Marchionni, L., Mešťan, M., Mujagić, E., Naacke, G., Prache, G., Rutecka-Góra, J., Šebo J., Voicu, ?. D., & Strandv?g Nagell, L. (2018). Pension savings: the real return. 2018 edition. Brussels: Better Finance. Retrieved from https://betterfinance.eu/wp-content/uploads/Pensi ons_Report_2018_-_Final_Version_-_for_Web.pdf (10.03.2020).
View in Google Scholar

Baker, H. K., De Ridder, A., & Rasbrant, J. (2020). Investors and dividend yields. Quarterly Review Of Economics and Finance, 76, 386?395. doi: 10.1016/j.qref. 2019.09.004.

DOI: https://doi.org/10.1016/j.qref.2019.09.004
View in Google Scholar

Bateman, H., Islam T., Louviere, J., Satchell, S., & Thorp, S. (2011). Retirement investor risk tolerance in tranquil and crisis periods: experimental survey evidence. Journal of Behavioral Finance, 12(4), 201?218. doi: 10.1080/15427560. 2011.620199.

DOI: https://doi.org/10.1080/15427560.2011.620199
View in Google Scholar

Barczuk, K. (2015). The usefulness of readability formulas in the insurance industry. Olsztyn Economic Journal, 10(4), 338?351.

DOI: https://doi.org/10.31648/oej.3157
View in Google Scholar

Barczuk-Grędzińska, K. (2018). Readability of the general insurance terms and conditions ? theory and application in insurance practice. Retrieved from https://www.wir.ue.wroc.pl/info/phd/WUT03e5b5f5160d4fa7b2b74650e5af36dc/Czytelno%C5%9B%C4%87+Og%C3%B3lnych+Warunk%C3%B3w+Ubezpieczenia+%E2%80%93+teoria+i+zastosowanie+w+praktyce+ubezpieczenio wej (20.10.2020).
View in Google Scholar

Berthon, J., Davydoff, D., Gabaut, L., Klages, M., Prache, G., Rossi, M., Rutecka, J., Struwe, K., & Viver, J.M. (2014). Pension savings: the real return. 2014 edition. Brussels: Better Finance. Retrieved from https://betterfinance.eu/wp-content/uploads/publications/Pensions_Report_2014_FINAL_-_EN_FOR_W EB.pdf (10.10.2020).
View in Google Scholar

Björnsson, C. H. (1968). Läsbarhet. Stockholm: Liber.
View in Google Scholar

Blake, D., & Haig, A. (2014). How do savers think about and respond to risk? Evidence from a population survey and lessons for the investment industry. London: Cass Business School. Retrieved from https://openaccess.city.ac.uk/id/ eprint/6815 (10.10.2020).
View in Google Scholar

Börsch-Supan, A. (2004). Mind the gap: the effectiveness of incentives to boost retirement savings in Europe. OECD Economic Studies, 39, 111?144.
View in Google Scholar

Broda, B., Maziarz, M., Piekot, T., & Radziszewski, A. (2010). Difficulty of texts on european funds in the light of statistical measures. Wrocławskie Towarzystwo Naukowe. Rozprawy Komisji Językowej, 37, 23?40.
View in Google Scholar

Carlin, B. I. (2009). Strategic price complexity in retail financial markets. Journal of Financial Economics, 91(3), 278?287. doi: 10.1016/j.jfineco.2008.05.002.

DOI: https://doi.org/10.1016/j.jfineco.2008.05.002
View in Google Scholar

Cash, A., & Tsai, H.-J. (2018). Readability of the credit card agreements and financial charges. Finance Research Letters, 24, 145?150. doi: 10.1016/j.frl.2017 .08.003.

DOI: https://doi.org/10.1016/j.frl.2017.08.003
View in Google Scholar

Casey, B. H., & Dostal, J. M. (2013). Voluntary pension saving for old age: are the objectives of self?responsibility and security compatible? Social Policy & Administration, 47(3), 287?309. doi: 10.1111/j.1467-9515.2012.00853.x.

DOI: https://doi.org/10.1111/j.1467-9515.2012.00853.x
View in Google Scholar

Chłoń, A., Góra, M., & Rutkowski, M. (1999). Shaping pension reform in Poland: Security through diversity. World Bank Social Protection Discussion Paper, 9923.
View in Google Scholar

Chłoń-Domińczak, A., Góra, M., & Rutecka, J. (2016). Jakie zmiany regulacyjne mogłyby wpłynąć na podniesieniu poziomu przyszłych świadczeń emerytalnych? Warszawa: Research Report for IGTE. Retrieved from http://documents1.worldbank.org/curated/en/372221468758982295/pdf/multi-page.pdf (10.08.2020).
View in Google Scholar

Choldin, M. T. (1979). Rubakin, Nikolai Aleksandrovič. In A. Kent, H. Lancour, & W. Z. Nasri (Eds.). Encyclopedia of library and information science: Volume 26. CRC Press.
View in Google Scholar

Cogan, Jr., & Aloysius J. (2010). Readability, contracts of recurring use, and the problem of ex post judicial governance of health insurance policies. Faculty Articles and Papers, 59, 93?126.
View in Google Scholar

Dopierała, Ł. (2017). Efficiency of pension products offered by life insurance companies: the case of individual pension accounts. Finanse i Prawo Finansowe, 2(14), 23?39. doi: 10.18778/2391-6478.2.14.03.

DOI: https://doi.org/10.18778/2391-6478.2.14.03
View in Google Scholar

Dopierała, Ł. (2018). Indywidualne konta emerytalne prowadzone przez zakłady ubezpieczeń. Efektywność inwestycyjna i zasady funkcjonowania. Gdańsk: Wydawnictwo Uniwersytetu Gdańskiego.
View in Google Scholar

Duda, I. (2015). Individual retirement accounts and individual retirement savings accounts in comparison to the savings potential of Polish households. Finanse: Czasopismo Komitetu Nauk o Finansach PAN, 2(8), 145?161.
View in Google Scholar

Ermakova, T., Fabian, B., & Babina, E. (2015). Readability of privacy policies of healthcare websites. Wirtschaftsinformatik Proceedings, 73.
View in Google Scholar

European Parliament (2014). Pension schemes. Retrieved from https://www.europarl.europa.eu/RegData/etudes/STUD/2014/536281/IPOL_STU(2014)536281_EN.pdf (15.09.2020).
View in Google Scholar

European Commission (2010). Private pension schemes - their role in adequate and sustainable pensions. Luxembourg: Publications Office of the European Union.
View in Google Scholar

European Commission (2018a). Pension adequacy report 2018 ? current and future income adequacy in old age in the EU (Volume 1). Luxembourg: Publications Office of the European Union. doi: 10.2767/40627.
View in Google Scholar

European Commission (2018b). The 2018 ageing report: economic and budgetary projections for the EU member states (2016-2070). Luxembourg: Publications Office of the European Union. doi: 10.2765/615631.
View in Google Scholar

Everitt, B. S., Landau, S., Leese, M., & Stahl, D. (2011). Cluster analysis. Chichester: John Wiley & Sons Ltd.

DOI: https://doi.org/10.1002/9780470977811
View in Google Scholar

Fisher, P. J., Hayhoe, C. R., & Lown, J. M. (2015). Gender differences in saving behaviours among low- to moderate-income household. Financial Services Review, 24, 1?13.
View in Google Scholar

Flesch, R. (1948). A new readability yardstick. Journal of Applied Psychology, 32(3), 221?233. doi: 10.1037/h0057532.

DOI: https://doi.org/10.1037/h0057532
View in Google Scholar

Góra, M. (2003). System emerytalny. Warszawa: Polskie Wydawnictwo Ekonomiczne.
View in Google Scholar

Guardiancich, I., & Natali, D. (2011). The EU and supplementary pensions: instruments for integration and the market for occupational pensions in Europe. ETUI Working Paper, 2009.11. doi:10.2139/ssrn.2264143.

DOI: https://doi.org/10.2139/ssrn.2264143
View in Google Scholar

Gunning, R. (1952). Technique of clear writing. New York: McGraw-Hill.
View in Google Scholar

Gyasi, W. K. (2019). Readability and corporate communication: the case of four banks in Ghana. Journal of Communications, Media & Society, 6(1), 21?44.
View in Google Scholar

Gray, W., & Laery. B. (1935). What makes a book readable. Chicago: University of Chicago Press.
View in Google Scholar

Gruszczyński, W., Ogrodniczuk, M. (Eds.). (2015). Jasnopis czyli mierzenie zrozumiałości polskich tekstów użytkowych. Warszawa: SWPS Uniwersytet Humanistycznospołeczny.
View in Google Scholar

Han, T., & Stańko, D. (2020). Pension scheme fees and charge ratios in 44 countries: a comparative study. International Social Security Review, 73(1), 99?137. doi: 10.1111/issr.12229.

DOI: https://doi.org/10.1111/issr.12229
View in Google Scholar

Hamburg, M., & Young, P. (1996). Statistical analysis for decision making. Belmont: Wadsworth Publishing Company.
View in Google Scholar

Hartigan, J. A. (1975). Clustering algorithms New York: Wiley.
View in Google Scholar

Jayasree, M., & Shette, R. (2020). Readability of annual reports and operating performance of Indian banking companies. IIM Kozhikode Society & Management Review. Advance online publication. doi: 10.1177/2277975220941946.

DOI: https://doi.org/10.1177/2277975220941946
View in Google Scholar

Jedynak, T. (2016). The directions of the development of supplementary pension scheme in Poland. Journal of Insurance, Financial Markets and Consumer Protection, 22(3), 34?48.
View in Google Scholar

Kaeding, W. (1898). Häufigkeitswörterbuch der deutschen Sprache. Steglitz.
View in Google Scholar

Kaliciak, A., Kurach, R., & Merouani, W. (2019). The importance of behavioural factors for pension savings decisions ? cross-country evidence. Acta Oeconomica, 69(3), 357?391. doi: 10.1556/032.2019.69.3.3.

DOI: https://doi.org/10.1556/032.2019.69.3.3
View in Google Scholar

Kendall, M. G. (1948). Rank correlation methods. London: Charles Griffin & Company Limited.
View in Google Scholar

Kincaid, J. P., & Fishburne, Jr R. P., Rogers R. L., & Chissom, B. S. (1975). Derivation of new readability formulas (automated readability index, FOG count and Flesh reading easy formula) for Navy Enlisted Personnel. Technical report, Institute for Simulation and Training. 56. Retrieved from https://stars.library. ucf.edu/istlibrary/56 (20.10.2020).

DOI: https://doi.org/10.21236/ADA006655
View in Google Scholar

KNF (2017). Indywidualne konta emerytalne i indywidualne konta zabezpieczenia emerytalnego w 2016 roku. Warszawa. Retrieved from https://www.knf.gov .pl/?articleId=56377&p_id=18 (15.06.2020).
View in Google Scholar

Lively, B. A., & Pressey, S. L. (1923). A method for measuring the ?vocabulary burden? of textbooks. Educational Administration and Supervision, 9, 389?398.
View in Google Scholar

Loughran, T., & McDonald, B. (2013). Measuring readability in financial disclosures. Retrieved from http://papers.ssrn.com/sol3/papers.cfm?abstract_id= 1920411 (12.11.2020).
View in Google Scholar

Luu, L., Lowe, J., Butler, J., & Byrne, T. (2017). Essential personal finance. New York: Routledge.

DOI: https://doi.org/10.4324/9781315531496
View in Google Scholar

Marcinkiewicz, E. (2015). Dobrowolne fundusze emerytalne w Polsce ? analiza działalności i wyników inwestycyjnych. In F. Chybalski & E. Marcinkiewicz (Eds.). Współczesne problemy systemów emerytalnych. Wybrane zagadnienia. Łódź: Wydawnictwo Politechniki Łódzkiej, 196?209.
View in Google Scholar

Marcinkiewicz, E. (2018). Uwarunkowania rozwoju dobrowolnych programów emerytalnych. Perspektywa makro- i mikroekonomiczna. Łódź: Wydawnictwo Politechniki Łódzkiej.
View in Google Scholar

Markauskas, M., & Saboniene, A. (2020). Evaluation of capital cost: long run evidence from manufacturing sector. Inzinerine Ekonomika-Engineering Economics, 31(2), 169?177. doi: 10.5755/j01.ee.31.2.21439.

DOI: https://doi.org/10.5755/j01.ee.31.2.21439
View in Google Scholar

Mączyńska, A., Šebo, J., Voicu, S. D., Carlucci, E., Christoff, L., Christensen, L., Deinema, M., Hagen, J., Herce, J. A., Houdmont, A., Gabaut, L., Popova, Y., Gr?nge-Hansen, L., Mešťan, M., Naacke, G., Nacheva, D., Nava, C., Joab, M., Prache, G., Rutecka-Góra, J., & Url, T. (2020), Long-term and pension savings. The real return. 2020 Edition. Brussels: Better Finance. Retrieved from https://betterfinance.eu/wp-content/uploads/The-Real-Return-Long-Term-Pensi on-Savings-Report-2020-Edition.pdf (10.11.2020).
View in Google Scholar

Mistrík J. (1968). Meranie zrozumittel?nosti prehocoru. Slovenská reč, 33, 171?178.
View in Google Scholar

OECD (2012). OECD pension outlook 2012. Paris: OECD Publishing. doi: 10.1787/9789264169401-en.

DOI: https://doi.org/10.1787/9789264169401-en
View in Google Scholar

OECD (2019). Pensions at a glance 2019: OECD and G20 indicators. Paris: OECD Publishing. doi: 10.1787/b6d3dcfc-en.

DOI: https://doi.org/10.1787/b6d3dcfc-en
View in Google Scholar

Oxera (2013). Study on the position of savers in private pension products. Brussels: Oxera Consulting Ltd. Retrieved from https://www.oxera.com/wp-content/uploads/2018/07/Position-of-savers-in-private-pension-products.pdf. pdf (15.04.2020).
View in Google Scholar

Pieńkowska-Kamieniecka, S. (2019). Diagnosis of the behavioural basis of decisions made in the area of pension provision and application in stimulating additional savings for old age. Ubezpieczenia Społeczne. Teoria i praktyka, 3(142), 79?96. doi: 10.32088/0000_12.
View in Google Scholar

Pisarek, W. (1969). Jak mierzyć zrozumiałość tekstu. Zeszyty Prasoznawcze, 4(42), 35?48.
View in Google Scholar

Rutecka-Góra, J. (2016). Evolution of supplementary old-age pension systems in selected CEE countries. Journal of Management and Finance, 14(4), 149?162. doi: 10.33119/ZiF.2016.14.4.

DOI: https://doi.org/10.33119/ZiF.2016.14.4
View in Google Scholar

Rutecka-Góra, J. (2019). Efficiency of a supplementary old-age pension system - the case of Polish voluntary pension funds. Financial Internet Quarterly ?e-Finanse?, 15(3), 76?87. doi: 10.2478/fiqf-2019-0022.

DOI: https://doi.org/10.2478/fiqf-2019-0022
View in Google Scholar

Rutecka-Góra, J., Bielawska, K., Hadryan, M., Kowalczyk-Rólczyńska, P., & Pieńkowska-Kamieniecka, S. (2020). Zrozumiałość, przejrzystość i efektywność indywidualnych produktów emerytalnych w Polsce. Warszawa: Oficyna Wydawnicza SGH. doi: 10.33119/978-83-8030-378-2.2020.202.

DOI: https://doi.org/10.33119/978-83-8030-378-2.2020.202
View in Google Scholar

Šebo, J., Voicu, Ş. D., Andersen, C., Carlucci, E., Christoff, L., Deinema, M., Gabaut, L., Galvaire, T., Hagen, J., Herce, J. A., Houdmont, A., Mączyńska, A., Manis, A., Mešťan, M., Naacke, G., Strandv?g Nagell, L., Prache, G., Rutecka-Góra, J., Url, T., & Vysniauskaite, A. (2019). Pension savings: the real return. 2019 edition. Brussels: Better Finance. Retrieved from https://betterfinance.eu/wp-content/uploads/Pension-Savings-The-Real-Return-2019-Edition-1.pdf (10.3.2020).
View in Google Scholar

Sherman, L. A. (1893). Analytics of literature: a manual for the objective study of English prose and poetry. Boston: Ginn and Co.
View in Google Scholar

Sołdek, A., & Stachnio, M. (2018). Sequence-of-returns risk in the management of retirement savings. Journal of Insurance, Financial Markets and Consumer Protection, 28(2), 22?38.
View in Google Scholar

Spearman, C. (1904). The proof and measurement of association between two things. American Journal of Psychology, 15, 72?101. doi: 10.2307/1412159.

DOI: https://doi.org/10.2307/1412159
View in Google Scholar

Styvens, Y. (2019). The role of the government in creating or enhancing the access to funded or unfunded pensions in the modern welfare state. In N. da Costa Cabral & N. Cunha Rodrigues (Eds.). The future of pension plans in the EU internal market. Coping with trade-offs between social rights and capital markets. Springer, Cham, 55?74. doi: 10.1007/978-3-030-29497-7_4.

DOI: https://doi.org/10.1007/978-3-030-29497-7_4
View in Google Scholar

Szczepański, M. (2015). Insurance against longevity risk in a pension system. The case study of Poland. Olsztyn Economic Journal, 10(4), 297?309.

DOI: https://doi.org/10.31648/oej.3154
View in Google Scholar

Szczepański, M., & Brzęczek, T. (2016). Risk management in occupational pension schemes. Institutional, fiscal-economic and demographic determinants. Poznań: Polskie Towarzystwo Ekonomiczne.
View in Google Scholar

Szczepański, M., & Kołodziejczyk, K. (2020). The initial stage of the implementation of employee capital plans in greater Poland from the perspective of human resource management: a research report. Human Resource Management, 3-4, 75?97. doi: 10.5604/01.3001.0014.1674.

DOI: https://doi.org/10.5604/01.3001.0014.1674
View in Google Scholar

Tse, A., Friesen, L., & Kalayci, K. (2016). Complexity and asset legitimacy in retirement investment. Journal of Behavioral and Experimental Economics, 60, 35?48. doi: 10.1016/j.socec.2015.12.001.

DOI: https://doi.org/10.1016/j.socec.2015.12.001
View in Google Scholar

Turner, J. A. (2013). Pension investors: complexity in advisory fee disclosures. In M. Szczepański (Ed.). Pension reforms - comparison and evaluation. Poznan: Publishing House of Poznan University of Technology, 49?75.
View in Google Scholar

Wissing, G-J., Blignaut A. S., & Van der Berg, K. (2016). Using readability, comprehensibility and lexical coverage to evaluate the suitability of an introductory accountancy textbook to its readership. Stellenbosch Papers in Linguistics, 46, 155?180. doi: 10.5774/46-0-205.

DOI: https://doi.org/10.5774/46-0-205
View in Google Scholar

Ward, J. H. (1963). Hierarchical grouping to optimize an objective function. Journal of the American Statistical Association, 58, 236?244.

DOI: https://doi.org/10.1080/01621459.1963.10500845
View in Google Scholar

Wray, D., & Dahlia, J. (2013). Exploring the readability of assessment tasks: the influence of text and reader factors. Multidisciplinary Journal of Educational Research, 3(1), 65?95. doi: 10.4471 /remie.201 3.04.
View in Google Scholar

Zarzeczny, G., & Piekot, T. (2017). Przystępność tekstów urzędowych w internecie. Wrocław: Oficyna Wydawnicza ATUT (10.03.2021).
View in Google Scholar

Zivadinovic, N. K., Dumicic, K., & Casni, A. C. (2009). Cluster and factor analysis of structural economic indicators for selected European countries. WSEAS Transactions on Business and Economics, 6, 331?341.
View in Google Scholar

Downloads

Published

2021-03-31

How to Cite

Pieńkowska-Kamieniecka, S., Rutecka-Góra, J., Kowalczyk-Rólczyńska, P., & Hadryan, M. (2021). Readability, efficiency and costliness of individual retirement products in Poland. Equilibrium. Quarterly Journal of Economics and Economic Policy, 16(1), 45–74. https://doi.org/10.24136/eq.2021.002

Issue

Section

Articles

Similar Articles

<< < 2 3 4 5 6 7 8 9 10 11 > >> 

You may also start an advanced similarity search for this article.