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.

Download the Netspar Brief (only available in Dutch).
Read the English summary.

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Netspar, Network for Studies on Pensions, Aging and Retirement, is a thinktank and knowledge network. Netspar is dedicated to promoting a wider understanding of the economic and social implications of pensions, aging and retirement in the Netherlands and Europe.


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