Choice architecture proposal for pension savings for the self-employed

Ample evidence shows that self-employed individuals save substantially less for retirement than employees. Less clear is whether saving less also means saving too little. This paper concludes that it does, but that self-employed individuals also have legitimate reasons to save less or in different ways than employees. A potential (partial) solution to this problem is the introduction of a choice architecture, which stimulates pensions saving but does not limit freedom to choose. Such a choice architecture is proposed, based upon behavioral economic research, specifically research on the effectiveness of pension choice architecture and behavioral differences between self-employed and employees. The proposed choice architecture consists of a module which uses a set of nudges to encourage pension saving. The module is to be introduced into the income tax declaration.

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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