Segmentation of pension plan participants. Identifying dimensions of heterogeneity

Reforms of funded occupational pension systems result in more choice and greater responsibility and investment risk for individual plan participants. Yet, studies suggest that participants in occupational pension schemes know very little about their pension and do not read information provided by pension providers. Potential pension gaps remain undetected, even though they may have severe consequences for participants once they retire. Pension providers are confronted with very heterogeneous participant bases, and they do not know which demographic and psychographic dimensions of heterogeneity determine whether participants seek information about their expected pension benefits.

In this paper, we review the literature concerning potential dimensions of heterogeneity in marketing, health promotion, psychology, behavioral finance, and economics. We then develop the Retirement Belief Model and argue that beliefs determine the information search behavior of participants. So in order for individuals to search for information, they have to (1) believe that the consequences of not informing themselves are severe (severity), and (2) that they are at risk of experiencing an undesirable outcome such as a pension gap (susceptibility), (3) think that the benefits of gaining information weigh heavier than the costs (benefits vs. barriers), and finally (4) feel that they are able to change their situation (self-efficacy).


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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