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Motivated Saving: The Impact of Projections on Retirement Contributions
By George Smyrnis, Hazel Bateman, Loretti Dobrescu, Ben R. Newell & Susan Thorp
Projections of future benefits can assist pension plan participants prepare for retirement. Here we measure the effects of projections of retirement incomes and lump sum balances on voluntary contributions and plan interactions of retirement savers. Data from a two-year field trial in a large Australian pension plan show that the frequency and average amount of participants’ voluntary contributions and interactions with the plan rose significantly in the first year of projection treatment and persisted into the second year of treatment. Using a related online experimental survey, we show that both future income and balance projections are needed to motivate significantly higher, long-term voluntary contributions. Our results identify effective projection formats and endorse efforts by pension regulators to enhance benefit statements.
Source @SSRN
