To address the low rates of participation in China's third-pillar pension insurance amid intensifying population aging and to promote the sustainable development of the multilevel pension insurance system, this study focuses on residents' microlevel demand behavior. Using data from the China Household Finance Survey (CHFS) and a probit econometric model, it empirically explores the mechanism underlying the impact of financial literacy on effective demand in China's third-pillar pension insurance market. The results show that (1) financial literacy significantly positively affects residents' retirement planning decisions and willingness to demand third-pillar pension insurance. (2) From the impact mechanism perspective, financial literacy indirectly enhances residents' willingness to participate in third-pillar pension insurance through three pathways: improving financial information acquisition ability, alleviating risk aversion, and reducing the bequest motive constraint. Here, the mediating role of the bequest motive is verified for the first time—specifically, higher financial literacy can weaken the inhibitory effect of this motive on the sustainable willingness to demand third-pillar pension insurance. (3) Heterogeneity tests reveal that the promoting effect of financial literacy is stronger among rural residents than among urban residents, among married residents than among unmarried residents, and among employed residents than among nonemployed residents. Based on theories of residents' behavioral decision-making and household asset allocation, this study innovatively analyzes the main behavioral constraint factors and mechanisms underlying the impact on the effective demand for China's third-pillar pension insurance, providing theoretical and empirical references for the sustainable development of China's third-pillar pension insurance system.
Wang et al. (Thu,) studied this question.