Netspar Brief 15: More Choice Does Not automatically Lead to Greater Pension Engagement
Very few people worry much about their retirement planning. At the same time, it is becoming increasingly important for everybody to be as informed as possible about their own situation. Individuals are being forced to assume an ever-greater share of responsibility for their old age. Meanwhile, Netspar research has shown that nearly 30% of Dutch households are at risk of having insufficient financial resources after retirement.
A lack of choice under the Dutch pension system is often cited as the reason for the low level of pension engagement among participants. In Netspar Brief 15, researchers Lisa Brüggen and Thomas Post (both of Maastricht University) demonstrate, based on a study of Swedish pension participants, that more freedom of choice does not automatically lead to greater involvement. Too much choice can even be paralyzing – certainly for people with limited financial knowledge. Sound choice architecture and limiting the number of options are essential, therefore, when offering freedom of choice. Communication (preferably customized) can be a very effective means of increasing involvement. Interventions such as framing, the use of images, and interactive pension tools help expand individuals’ knowledge of their own pension situation.
- Emoties en lange termijn beslissingen op financieel gebied: Relevantie en meting (Emotions and long-term financial decisions: Relevance and measurement), Elisabeth Brüggen, Luuk Perik, Thomas Post, Survey Paper 51 – June 2018
- Activating pension plan participants: Investment and assurance frames, Chantal Hoet, Elisabeth Brüggen, Thomas Post, Wiebke Eberhardt, Design Paper 72 – May 2017
- Or watch the microlearning video on pension communications with Wiebke Eberhardt: https://youtu.be/P_QjD5ciasI
- Life events and participant engagement in pension plans, Elisabeth Brüggen, Matthew Blakstad, Thomas Post, Design Paper 93, 2017
- Keuzevrijheid in pensioen (Pensions freedom of choice), Harry van Dalen, Kene Henkens, Netspar Brief 5 – March 2016