Relationship between Financial Sophistication and Perceived Retirement Saving Adequacy among Public University Employees in Kenya: The Moderating Effects of Institutional Factors
Main Article Content
Keywords
Institutional factors, financial sophistication, perceived retirement saving adequacy, Public University Employees
Abstract
Kenya's public university employees, like many in the global workforce, face the challenge of preparing for a financially secure retirement amidst the complexities of modern financial markets. Financial sophistication plays a pivotal role in shaping retirement saving behaviors. However, this relationship is not isolated; it operates within the context of institutional factors within the university system which are anticipated to influence the extent to which financial sophistication translates into perceived retirement saving adequacy. Therefore, the objective of this study was to determine the moderating effects of institutional factors on the relationship between financial sophistication and perceived retirement saving adequacy among University Public Employees in Kenya. The study employed life cycle theory and neo institutional theory. The study adopted positivist philosophy and explanatory research design. The target population was 17,320 employees from public universities within Nairobi in Kenya. Taro Yamane (1973) sample size formula was used to calculate a sample size of 389 respondents. Closed ended questionnaires were used to collect the data from respondents selected using stratified systematic random sampling. The data that was gathered was encoded into the Statistical Package for the Social Sciences (SPSS) software and subsequently subjected to analysis using inferential and descriptive statistical methods. The findings indicated that there was a significant correlation between perceived retirement savings adequacy and financial sophistication (???? = .747, ???? = .000). Also, financial sophistication also correlates with institutional factors (???? = .557 (???? = .000). Finally, institutional factors negatively and significantly moderated the relationship between financial sophistication and perceived retirement saving adequacy (β = −.549, p = .000). This implies that public university employees have a poor perception about institutions that are tasked with managing pensions both at national and institutional level. Therefore, there is need for more reforms to ensure pension institutions are managed better and operate within set guidelines. This will reduce institutional failures and will increase retirement savings which in turn will improve perceptions about saving for retirement.
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Sheila J. Arusei , Department of Accounting and Finance, School of Business and Economics, Moi University, P.O Box 3900-30100 Eldoret
Department of Accounting and Finance, School of Business and Economics, Moi University, Eldoret
Josephat Cheboi, Department of Accounting and Finance, School of Business and Economics, Moi University, P.O Box 3900-30100 Eldoret
Department of Accounting and Finance, School of Business and Economics, Moi University, Eldoret
Ronald Bonuke , Department of Marketing and Logistics, School of Business and Economics, Moi University, P.O Box 3900-30100 Eldoret
Department of Marketing and Logistics, School of Business and Economics, Moi University, Eldoret