Diminishing the pension gap: From insight to action

Pension is a complex product. It is a long term investment good, which faces much uncertainty, learning-by-doing is limited and insight in the broader picture of personal finance is required to save optimally. On top of the complexity of the product, human irrationality and illiteracy decrease the chance of spreading consumption optimally. The AFM showed there is a pension gap. This research finds a gap between insight by the participants in the pension gap and action. Data collected for this research shows that only 20% of the respondents have the intention of adjusting their current life(style) if they are aware of a cut in their pension income of 25%. Moreover, 34% think it is wise to adjust, but state they will probably not. This implies that informing people will not be sufficient to diminish the pension gap. That a majority of retirees state that they will adjust their life(style) by retroactive effect, supports the view to interfere with choice making, as people do not choose optimally. These results imply that pension policy should focus on pushing people in the right direction and the current goal of communication should change to informing instead of putting into action.