Choice guidance: putting participants first

“Suboptimal pension choices can be mitigated by effective choice guidance”

Choice guidance is currently a hot subject in the Dutch pension sector. This is mainly due to the new open standard about this in the Future Pensions Act that came into force on 1 July 2023. With the new standard, the legislator wants to mitigate the risks of suboptimal choices by participants. Now, pension administrators are examining how to implement choice guidance in a way that helps participants the most whilst taking legal, organizational, and ethical considerations into account. This article offers guidance to pension providers for developing their vision and approach to choice guidance.


How To Approach Choice guidance: Roadmap & suggestions

Step 1. Identify participant needs: what guidance will help participants?

  • Map participants’ needs before deciding which forms of guidance are appropriate.

Step 2. Determine ambition: what guidance are pension providers willing and able to provide?

  • Formulate a clear ambition so that choice guidance is given substance in a effective and creative manner.

Step 3. Take stock of the current situation: what is already in place and what still needs to be done?

  • Design the choice environment consciously and carefully by taking stock of what is already in place and what still needs to be improved.

Step 4. The next step: implement, monitor and improve.

  • Decide which criteria should be used to determine the success of the guidance and implement these in a monitoring and improvement cycle.


Key Takeaways for the Industry

  • Draw inspiration and insight from scientific research, knowledge bases and other sectors, and share these new insights as much as possible. For example, the Netspar research program “Communication and Choice” provides a rich base of relevant behavioral insights relevant for choice guidance.
  • Combine different ways to gain insight into participants’ needs: focus not only on what participants say their needs are, but also on their eventual decisions and behaviors. To continuously improve their choice guidance, it is important to think about the intended effects of choice guidance from the beginning and how to measure whether these effects are achieved. It is useful to distinguish between monitoring the process and monitoring the outcome.

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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