Netspar Brief 15 – More Choice Does Not Lead to Greater Pension Engagement

Lack of choice under the Dutch pension system is often cited as the reason for the low level of pension engagement among participants. A Netspar study of Swedish pension participants has revealed, however, that more choice does not automatically lead to greater engagement. Too much choice can even be paralyzing – certainly for people with limited financial knowledge. It is therefore essential when offering freedoms to institute a sound choice architecture and limit the number of options available. 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.