Investors’ activity in response to information about their pensions


This paper uses individual-level data on fund choices in the mandatory Swedish Premium Pension System (PPS) to analyse how investors respond to information about their pension savings. The Swedish Pensions Agency mails an annual information letter, the Orange Envelope, to all investors to provide tailored information about their public pension accounts. To examine the effect of this pension communication, I exploit the staggered roll-out of the information letters across different Swedish counties. The results show that the letters significantly increase investors’ trading activity in the PPS. Still, the letters’ economic relevance is limited due to low general engagement among the savers – however, those who respond to the letters by reallocating their portfolios benefit by having better portfolio performance and lower fees the upcoming years. The effect is driven by active investors with higher cognitive abilities who adjust their portfolios by divesting from low- performing funds. These findings suggest that providing communication about pensions has smaller effects on less engaged individuals, and unresponsive investors are vulnerable to worse pension investments.

Working Paper
Amedeus Malisa
Amedeus Malisa
Economic consultant