female faculty members awareness about retirement planning avenues

Female Faculty Members - Awareness About Retirement Planning

Avenues

*Prof. (Dr.) Harsh Purohit, Chair: ICICI Bank Chair for BFSI, WISDOM, (Banasthali Vidyapith)

FMS – WISDOM Banasthali University

Banasthali - [email protected]

** Gargi Pant, FMS, WISDOM, (Banasthali Vidyapith)FMS – WISDOM

Banasthali UniversityBanasthali – 304022

[email protected]

Abstract:

Retirement planning is an integral part of financial planning for any individual. Every individual

looks forward to spending the post retirement years in the lap of luxury. A person needs to take

challenging investment decisions in order to optimally plan for retirement. These decisions as per

finance theories have been motivated by reasoning while unfortunately the intuition aspect has

been portrayed in a negative manner by behavioural finance advocates. The research is an

attempt to study the awareness of female faculty member towards retirement planning avenue. In

this paper we had analyzed the attitude & awareness of female faculty members about retirement

planning avenues. Only 10% of the population in India goes for the retirement planning or some

social security. In this paper we are more focused towards retirement planning, retirement

planning avenues and the awareness of female faculty members towards these avenues.

mailto:[email protected]

mailto:[email protected]

Introduction:

The dictionary meaning of investment is to commit money in order to earn a financial return or

to make use of money for future benefits or advantages. Investment benefits both economy and

society. The overall return that an investor may realize depends upon a number of things such as

amount of money available for investment, the degree of risk that the investor is willing to take;

the amount of immediate income that is needed ; the degree of liquidity that is required, the

intelligence and knowledge that the investor processes; and sheer luck. Investors have various

goals out of which retirement planning is most important. (Source: Srivastava Sarika, 2011,

Thesis on “Investors’ Attitude towards Secondary Market Equity Investments: A Study in

Allahabad and Varanasi Cities” Submitted at Banasthali University under supervision of Dr.

Harsh Purohit.

Retirement Planning:

Retirement schemes are basically a financial assurance that a person will continue to earn a

reasonable income when his professional income starts to ebb and lead a comfortable life. The

trend of opting for retirement plans is increasingly popular in India within few years. Even

people who are retiring from government sector and have a secure pension are still opting private

retirement schemes for future financial security. (Source: http://www.paycheck.in/main/work-

and-pay/paycheck-articles-archives/retirement-plans-in-india,accessed on May 20, 2011)

Every individual looks forward to spending the post retirement years in the lap of luxury.

Retirement planning is essential so that one can: 1) Prepare for unforeseen circumstances

(Planning for the events that may or may not happen) 2) Maintain a positive outlook to life 3)

Plan an early retirement (Planning for an early retirement arms one with more options to face

emergencies) 4) Beat Inflation 5) Invest in top notch medical care 6) Secure family’s future 7)

Keep oneself updated on retirement plans and benefits 8) Safeguard one’s saving

In today’s era retirement planning is a major issue. You can make your future safe, comfortable

and much better if you take care of retirement planning rather than if you don’t do it. It has

become extremely important for one to plan for his/her retirement and at least take a step towards

it. Increase in life expectancy, Increase in dependency ratio and decline of joint family structure

are some points which will realize you that the planning for your own retirement is not just an

option but it’s a necessity now.

Literature Review:

Dorfman et. all (1984) found in their study that many professors across types of institutions

planned for retirement. A majority of faculty had thought seriously about retirement, made

financial plans, checked on retirement benefits. Retired faculties were generally favorable about

retirement. The author has also written that faculties of university appeared to do more planning

for retirement than did faculty from other institutions.

Gary P. Johnson and Joseph Q. Gaetino (1982) written that teachers strongly support and

agree with the general concept of early retirement incentive plans. In other words teachers are

not interested in the extension of their employment tenure. The author indicated three

implications for the specific design of early retirement plan programs. First, the early retirement

option should be made available to teachers somewhere between the ages of fifty and fifty-five.

Second, to be most attractive, ERIP should contain incentives/features that offset all or nearly all

of the major monetary costs associated with early retirement. Third, and contrary to current

practice, ERIP need not always and automatically include opportunities for early retirees to work

part-time in the school district.

Kathleen Arano, Carl Parker, Rory Terry (2010) Gender-based risk aversion and

retirement asset allocation estimates in their study that women who have spouses who

influence them to hold a larger percentage of their retirement assets in stocks take lesser risk than

men whose spouses likewise influences them to be less risk averse. This may suggest that

women are more risk averse than their spouse

Annamaria Lusardi and Olivia S. Mitchell (2011) in their paper “Financial literacy around

the world: an overview” In an increasingly risky and globalized marketplace, people must be

able to make well-informed financial decisions. New international research demonstrates that

financial illiteracy is widespread in both well-developed and rapidly changing markets. Women

are less financially literate than men, the young and the old are less financially literate than the

middle-aged, and more educated people are more financially knowledgeable. Most importantly,

the financially literate are more likely to plan for retirement. Instrumental variables estimates

show that the effects of financial literacy on retirement planning tend to be underestimated. In

sum, around the world, financial literacy is critical to retirement security.

Schubert (2006) shows that women appear less sensitive to probabilities and more pessimistic

about gains than men. In risk management, women appear to have a comparative advantage with

respect to diversification and communication tasks. Schubert (2006) describes the notion that

men are less risk averse than women as a stereotype that leads to discrimination against women

in the labor market and keeps women from assuming managerial positions. This is because a

firm’s value depends on how much risk it takes, which is in the end determined by the choices

that firm managers make.

Bateman, Louviere, Thorp, Islam and Satchell (2009) found that age and income level are

important determinants of preference class while variability is determined largely by underlying

risk tolerance and age. They also find that respondents compare the characteristics of nearby

investments options when deciding on their most preferred choice.

They noticed that young and low income retirement saver were more likely to respond positively

to net expected return and negatively to risk but older and higher income retirement saver appear

more likely to behave contrary. This study shows the importance of risk/return characteristics of

investment options as well as their ordering on the investment choice menu.

Research Gap:

Above studies facilitate us to understand the existing knowledge about retirement planning and

how investors take decisions.

Furthermore the studies throw light on irrational behaviour of investors have the potential to be a

significant supplement to the conventional finance theories. The volume of research in the area

of behaviour finance has grown over the recent years. The study of behaviour finance is helpful

in many ways. It allows investors to make investment decisions by considering their perception,

emotions and the possibility of being wrong. It is believed that perfect application of behaviour

finance can make an Indian investor successful. Behavioral finance offers a platform to

understand the financial decisions by being aware of our emotions as well as those of others and

using this information to create the wealth.

Research Objective:

The present study has the following research objectives:

To test the level of awareness of retirement planning among faculty member in Rajasthan

and suggest ways and means for development of such awareness.

The study proposes to test the null hypotheses in respect of awareness of female faculty

members towards retirement schemes:

Ho1: Female faculty members are not highly aware about various investment products

useful for retirement planning.

Research Methodology:

“Research is performing a methodical study in order to prove a hypothesis or answer a

specific question.” (Martyn Shuttleworth, 2008). Research is any original and systematic

investigation undertaken in order to increase knowledge and understanding and to establish facts

and principles. It comprises of creation of ideas and generation of knowledge that lead to new

and substantial improved insights.

Data Collected: Data Type: The data was collected from the Primary sources. Primary research is an

essential part of any paper and was implemented in the initial stages to understand the

outline and build a framework for the later analysis. The collection of Primary data

involved the pro-active seeking of data, and which was useful in the analysis and

planning of the research project.

Data Source: The data is collected from various sources. The data is taken from the

female faculty members of the premier Universities like: Banasthali University, Sukhadia

University, and BITS Pilani.

Data Analysis &Tools: The study will use a variety of questions to find out the complete information about the topic

under research. Apart from dichotomous and multiple-choice questions, the questionnaire will

include statements, which the respondents shall be required to, rate on the basis of likert scale.

The present study is an attempt to study the awareness of female faculty member towards

retirement Planning. The data was collected from various Universities like Banasthali University,

Sukhadia University and BITS Pilani. With the help of Statistical Software for Social Sciences

(SPSS) and EXCEL the data was analyzed and results were drawn after using various statistical

tools. SPSS Statistics is a software package used for statistical analysis. In addition to statistical

analysis, data management (case selection, file reshaping, creating derived data) and data

documentation (a metadata dictionary is stored in the data file) are features of the base software.

Research Finding:

Interpreting the Tests

A p-value (the probability of being wrong if accepted the alternate hypothesis) can be computed

in EXCEL or SPSS as follows:

= CHIDIST (statistic, dof)

= CHIDIST (11.56, 1)

Excel will return the P – Value, in this case 0.00067, since the probability of being wrong is less

than 0.05 we accept the alternate hypothesis

Null Hypothesis:

H 0 = Faculty members are not highly aware about various investment products

Alternate Hypothesis:

H a = Faculty members are highly aware about various investment products.

Table No. 1.1 Results of Chi square test on the basis of marital status

S.No Retirement Avenues Chi sq. Value/p - value Inference

1 Mutual Funds

Chi Sq = 12.591, DF = 2,

p-Value = 0.002 H 0 Rejected

2 Bonds

Chi Sq = 15.673, DF = 2,

p-Value = 0.000 H 0 Rejected

3 Provident Fund

Chi sq = 8.891, DF = 2, p-

Value = 0.239 H 0 Accepted

4 Public Provident Fund

Chi sq = 6.891, DF = 2, p-

value = 0.182 H 0 Accepted

5 Equity Share

Chi sq = 13.693, DF = 2,

p-value = 0.001 H 0 Rejected

6 Pension Fund A/C

Chi sq= 31.923, DF = 2,


7 ULIP

Chi sq = 11.545, DF = 2,


8 ETF

Chi sq = 4.884, DF = 2, p-


9 Gold ETF

Chi sq = 3.841, DF = 2, p-


10 New Pension Scheme

Chi sq = 24.424, DF = 2,


11 Bank Saving/FD/RD

Chi sq = 7.786, DF = 2, p-


12 Gold/ Precious Metal

Chi sq = 53.641, DF = 2,


13 Real Estate

Chi sq = 39.402, DF = 2,


Inference: Fail to accept null hypothesis, hence awareness about retirement planning avenues is

affected by Marital Status.

Null Hypothesis: Awareness is not affected by Age

Alternate Hypothesis: Awareness is affected by Age

Table 1.2: Results of Chi square test on the basis of Age

S.No Retirement avenues Chi Sq Value Inference

1 Provident Fund

Chi sq = 8.529, DF = 8, p-


2 Public Provident fund

Chi sq = 8.112, DF = 8, p-


3 Bank Saving/ FD/ RD

Chi sq = 7.456, DF = 8, p-


4 Mutual Fund

Chi sq = 22.024, DF = 8, p-

value = 0.005 H 0 Rejected

5 Equity Share

Chi sq = 19.552, DF = 8, p-


6 Bonds

Chi sq = 25.235, DF = 8, p-


7 Pension Fund A/c

Chi sq = 17.760, DF = 8, p-


8 ULIP

Chi sq = 19.621, DF = 8, p-


9 New Pension scheme

Chi sq = 24.673, DF = 8, p-


10 Real Estate

Chi sq = 19.232, DF = 8, p-



Chi sq = 24.466, DF = 8, p-


12 ETF

Chi sq = 9.887, DF = 8, p-


13 Gold ETF

Chi sq = 7.136, DF = 8, p-


Null Hypothesis: Awareness is not affected by Designation

Alternate Hypothesis: Awareness is affected by Designation

Table 1.3: Results of Chi square test on the basis of Designation

S.N

o Retirement avenues Chi Sq Value Inference

1 Provident Fund

Chi sq = 6.042, DF = 4, p-value

= 0.152 H 0 Accepted







4 Mutual Fund

Chi sq = 17.531, DF = 4, p-


5 Equity Share

Chi sq = 15.371, DF = 4, p-


6 Bonds

Chi sq = 15.228, DF = 4, p-


7 Pension Fund A/c

Chi sq = 14.846, DF = 4, p-


8 ULIP (Insurance Plan)

Chi sq = 11.655, DF = 4, p-



Chi sq = 22.431, DF = 4, p-


10 Real Estate

Chi sq = 12.582, DF = 4, p-



Chi sq = 14.715, DF = 4, p-


12 ETF

Chi sq = 8.645, DF= 4, p-value


13 Gold ETF



Null Hypothesis: Awareness is not affected by Income

Alternate Hypothesis: Awareness is affected by Income

Table No. 1.4: Results of Chi square test on the basis of Income

S.No Retirement avenues Chi Sq Value Inference

1 Provident Fund

Chi sq = 8.939, DF = 8, p-



Chi sq = 9.532, DF = 8, p-



Chi sq = 10.352, DF = 8, p-


4 Mutual Fund

Chi sq = 26.967, DF = 8, p-


5 Equity Share

Chi sq = 25.673, DF = 8, p-


6 Bonds

Chi sq = 24.361, DF = 8, p-


7 Pension Fund A/c

Chi sq = 19.544, DF = 8, p-


8 ULIP (Insurance Plan)

Chi sq = 13.941, DF = 8, p-



Chi sq = 20.369, DF = 8, p-


10 Real Estate

Chi sq = 20.447, DF = 8, p-



Chi sq = 23.884, DF = 8, p-


12 ETF

Chi sq = 10.989, DF = 8, p-


13 Gold ETF

Chi sq = 13.007, DF = 8, p-


Table No. 1.5: Segmentation factor & awareness Difference

S.No Term

Difference in

Awareness

based on

Marital status

Difference in

Awareness

based On Age

Difference in

Awareness

based on

designation

Difference

in

awareness

based on

Income

1 Provident Fund No No No No

2

Public Provident

Fund No No No No

3

Bank Saving/ FD/

RD No No No No

4 Mutual Fund Yes Yes Yes Yes

5 Equity Share Yes Yes Yes Yes

6 Bonds Yes Yes Yes Yes

7 Pension Fund A/c Yes Yes Yes Yes

8 ULIP Yes Yes Yes No

9

New Pension

Scheme Yes Yes Yes Yes

10 Real Estate Yes Yes Yes Yes

11

Gold/ Precious

Metal Yes Yes Yes Yes

12 ETF No No No No

13 Gold ETF No No No No

Inference: It is observed that female faculty members are aware about retirement planning

avenues & it is a function of socio- economic status.

Table No. 1.6: Segmentation Factor and overall Awareness

S.No Term

Overall

Awareness

based on

Marital status

Overall

Awareness

Based on Age

Overall

Awareness

Based on

Designation

Overall

awareness

Based on

Income

1 Provident Fund High High High High

2

Public Provident

Fund High High High High

3

Bank Saving/ FD/

RD High High High High

4 Mutual Fund High Medium High High

5 Equity Share Medium Medium Medium Medium

6 Bonds High High Medium High

7 Pension Fund A/c Medium Medium Medium Medium

8 ULIP Medium Medium Medium Low

9

New Pension

Scheme Medium Medium Medium Medium

10 Real Estate Medium Medium Medium Medium

11

Gold/ Precious

Metal High High Medium High

12 ETF Low Low Low Low

13 Gold ETF Low Low Low Low

Inference: For a given awareness parameter overall awareness is generally the same across all

the segmentation factor. The awareness about ETF and gold ETF is low as compared to

Provident fund and Public provident fund.

Table 1.7: Ranking of Awareness Parameter based on Average Score

Ranking of awareness parameter based on average score

Awareness Parameter Avg. Score Rank

Provident Fund 4.69 1

Public Provident fund 4.66 2

Bank saving A/C/RD/FD 4.62 3

Mutual Funds 4.58 4

Equity Share 4.55 5

Bonds 4.47 6

Pension Fund A/C 4.43 7

ULIP (Unit Linked Insurance Plan) 4.4 8

New Pension Scheme 4.37 9

Real estate /Property 3.35 10

Gold / Precious Metal 3.31 11

ETF (Electronic Traded Fund) 2.09 12

Gold ETF 1.97 13

Note: The rating scale is 1 to 5 where 1 stands for very low, 2 for low, 3 for medium, 4 for high

and 5 for very high. It has been seen that the female faculty members are aware about retirement

planning avenues. They are highly aware about Provident fund, public provident fund , FD/RD

but the awareness about ETF and Gold ETF is low as compared to other avenues.

Provident Fund

Public Provident fund

Bank saving A/C/RD/FD

Mutual Funds

Equity Share

Bonds

Pension Fund A/C

ULIP (Unit Linked Insurance Plan)

New Pension Scheme

Real estate /Property

Gold / Precious Metal

ETF (Electronic Traded Fund)

Gold ETF

0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 5

4.69

4.66

4.62

4.58

4.55

4.47

4.43

4.4

4.37

3.35

3.31

2.09

1.97000000000001

Avg. Score

Chart 1.1

Inference: From the above results it is clear that overall awareness amongst female teachers is

high about the retirement planning avenues.

Limitation of Study:

The current research only cover female faculty members’ attitude towards retirement

scheme.

Study area of this research confined to Rajasthan state only and may not give similar

result when generalized to other regions.

Investors included here is only faculty members of institutes other professional females

are not included in the research.

Conclusion:

Retirement planning is an integral part of financial planning for any individual. Every individual

looks forward to spending the post retirement years in the lap of luxury. A person needs to take

challenging investment decisions in order to optimally plan for retirement. The female faculty

members are aware about retirement planning avenues but they are more aware about the secured

avenues of investment. Retirement planning is something in which one should spend some time.

With an increase of life expectancy ratio, increase in dependency ratio and decline in joint family

structure make retirement planning more important. Faculty members are more aware about the

avenues like Provident fund, public provident fund, RD/FD and they are less aware about ETF

and Gold ETFs. They are moderate about equity shares, ULIP plans and real estate. The overall

awareness of female faculty members towards retirement planning is high.

Bibliography:

1. Busha, Charles H., and Stephen P. Harter. (1980) "Research Methods in Librarianship:

Techniques and Interpretation" Orlando, FL: Academic Press, Inc.

2. Johnson, P. Gary., Gaetino, Q. Joseph., (1982) ‘Teacher Attitudes Toward Early

Retirement Incentive Plans’, Journal of Education Finance, Vol. 7, no. 3, pp. 243-261.

3. Dorfman, T. Lorraine., Conner, A. Karen., Ward, William., Tompkins, B. Jean., (1984)

‘Reaction of Professors to Retirement: A Comparison of retired faculty from the three

types of institutions’, Vol. 20, no. 1, pp 89-102.

4. Jill Hussey & Roger Hussey (1997) Business Research: "A Practical Guide for

Undergraduate and Post graduate students", London: Macmillan

5. Schubert, R., 2006, ‘Analyzing and managing risk- on the importance of gender

difference in risk attitudes, ‘Managerial Finance, vol. 9, pp. 706-715.

6. Bateman, H., Louviere, J., Thorp, S., Islam, T., and Satchell, S., (2009) An Experimental

Survey of Investment Decisions for Retirement Savings.

7. Malhotra and Dash (2009), “Marketing Research: An Applied Orientation”, Pearson

Prentice Hall.

8. Kathleen Arano, Carl Parker, Rory Terry (2010) Gender-based risk aversion and

retirement asset allocation (2010)

Western Economic Association International ISSN: 0095-2583 Vol. 48(1)

9. (http://myiris.com/newscentre/stroyshow.php?

fileR=2011022316343019&dir=2011/02/23 & sec ID=nchometopst).

10. http://www.jagoinvestors.com/2011/03/retirement-planning-india-future.html

http://myiris.com/newscentre/

http://www.freepatentsonline.com/ISSN-0095-2583.html

female faculty members awareness about retirement planning avenues

Economy & Finance