Personal Investment Savings Pension Research

China has been in the process of establishing the so called three pillar pension system, which includes basic pension system, occupational pension scheme and personal investment&savings plan. The dilemma of basic pension system and occupational pension scheme on the operational level makes the personal investment&savings plan be critical and necessary. Among different individual investment outlets, it is self evidence that the investment of public offering fund is the best choice for personal investor. In this regard, it is crucial to understand people’s behavior with fund investment. According to the well known life cycle theory, the elderly’s life quality is heavily determined by the success of individual pension-motivated investment. Therefore our research is very relevant and important with the sustainability of Three Pillar Pension System.This paper started from analyzing the background of China’s pension system development and the challenges faced by individual investor. And then we propose that public offering fund is the most appropriate personal pension investment outlet and the rationality of the fund investment behaviors significantly affect the quality of personal endowment. Secondly, based on literature survey, our paper deploys the micro-econometric approach to empirically estimate the behavior random utility model of the demand of fund. The individual micro attributes have been included in the model include, gender, age and experience, etc. The empirical result shows that the personal fund investors are indeed heterogeneity in terms of rationality. People with less rationality tend to be overdependence on the fund company’s historical performance. We use the model to estimate the high capital premium resulted from variation of rationality, which means the endowment loss caused by the bounded rationality from the behavioral finance perspective. Based on our empirical findings, we propose the policy suggestion regarding with individual’s bounded rationality in fund investment.