Impact of Financial Literacy on Pension Holders’ Investment Decisions with Special Reference to Gampaha District

Financial literacy refers to the knowledge and skills that enable individuals to make informed and effective decisions in managing their finances. It plays a vital role in strengthening financial development and contributing to the overall economic growth of a country. For pension holders in Sri Lanka, financial literacy is especially important, as effective management and investment of pension income directly influence both their personal financial security and the wider economy. This study investigates the impact of financial literacy on investment decision-making among pension holders in the Gampaha District of Sri Lanka. A total of 384 pensioners participated in the research. The analysis focused on four key dimensions of financial literacy including future perspective, risk tolerance, financial knowledge, and decision-making power, with education level considered as a moderating variable. The findings reveal that financial literacy has a positive and significant effect on pensioners’ investment decisions. Among the examined dimensions, future perspective demonstrated the strongest impact, while decision-making power showed the weakest. Education, as a moderating factor, was found to have no significant impact on investment decisions. One of the key contributions of this research is the focus on the pensioners as this study fills a gap in investment behavior literature by targeting pensioners specifically which is a demographic that is often under presented in financial literacy research. Based on these results, the study recommends several practical measures such as expanding investment opportunities for pensioners to enhance financial literacy, encouraging financial institutions to organize awareness sessions on current financial conditions, and providing hands on training programs to strengthen decision-making skills.