In the U.S. and in Chile, there have been heated debates about the relative merits of a decentralized privatized pension system relative to a more traditional social security system. One criticism of a privatized system is that consumers are not sufficiently financially literate to make saavy decisions when it comes to selecting among funds in a way that takes into account commissions/fees and fund performance. Another concern is that consumers may not understand risk-return relationships and may therefore tend to take on too much risk. On the firm side, critics of decentralized, privatized pension systems raise concerns that firms can engage in anticompetitive behavior and may be able to take advantage of consumers’ lack of knowledge by charging them high fees and account maintenance charges. The proposed research contributes to this debate by analyzing the key determinants of consumers’ choice of fund and choice of investment portfolio within a fund. Specifically, we examine how decisions depend on demographic characteristics, current and past fees and returns, financial literacy and risk preference. To study these questions, we analyze two rounds of a longitudinal dataset recently gathered in Chile - the 2002 HLSS (Historia Laboral y Seguridad Social) data and the 2004 EPS ((Encuesta de Previsión Social or EPS) data. We merge the individual level household survey data with administrative data on pension plan holdings and contributions, on returns, market shares, and the fee structure of different funds. This research will also provide new evidence on whether mutual funds structure their fees so as to target different segments of the market, on how their consumers differ, and whether and to what extent they engage in practices, such as imposing exit fees, that inhibit competition among funds and discourage new entry. The work in this project will form a solid basis for a more comprehensive research proposal either to NSF or NIH in the future. The project is indirectly related to health, in that health affects financial investment decisions and financial security after retirement may also have a direct effect on health.