A study of voluntary retirement savings behaviour among muslim employees in Klang valley

Abstract

The unprecedented increase in life expectancy, along with the demographic changes over the last couple of decades, will intensify the need for adequate saving post-retirement. Prior economic literature did not propose an explanation for the declining saving for post-retirement. This study seeks to obtain the attributes influencing voluntary retirement savings behaviour by explaining notions of retirement saving awareness, financial literacy, personal financial planning, consumer religiosity, the life-cycle theory of saving and theory of planned behaviour (TPB). This cross-sectional study collects and analyses self-administered questionnaire survey data from 638 Muslim employees in Malaysia using Partial Least Square (PLS) technique. The present study suggests that retirement saving awareness, personal financial planning, income life-cycle, subjective norm, perceived behavioural control and behavioural intention influence individuals’ voluntary retirement savings behaviour. However, financial literacy, consumer religiosity, age varying contribution and attitude do not significantly influence voluntary retirement savings behaviour. Drawing upon the extended model of the life-cycle theory of saving and theory of planned behaviour, this study partially supports that the life-cycle theory of savings predicts one’s participation in voluntary retirement savings. Though attitude is an integral component of human behaviour it does not correlate with the behavioural response on economic consequences of voluntary retirement savings behaviour. The emerging factors from this study would provide an ample evidence to the government, policy makers, fund managers and financial planner in understanding consumer preference and behaviour on voluntary retirement savings behaviour. This is important for the aforementioned parties to work on policies and marketing strategies that can encourage more people to save for their retirement. Voluntary retirement saving is an emerging phenomenon in the developing countries like Malaysia. This study provides detail analysis to gain deeper insight into factors explaining particular attributes of voluntary retirement savings behaviour. This study contributes to the existing literature and provides a fresh empirical perspective on voluntary retirement savings behaviour from the Malaysian context. The findings of this study serve the guidelines to enhance the performance of financial planner and industry in promoting voluntary retirement savings in an emerging economy and developing country like Malaysia.