Suspicious Minds (can be a good thing when saving for retirement)

50 Pages Posted: 9 Mar 2015 Last revised: 10 Sep 2015

See all articles by J. Deetlefs

J. Deetlefs

UNSW Australia Business School, School of Marketing

Hazel Bateman

UNSW Sydney, CEPAR

Loretti Dobrescu

University of New South Wales, School of Economics

Ben Newell

University of New South Wales (UNSW)

Andreas Ortmann

UNSW Australia Business School, School of Economics

Susan Thorp

University of Sydney Business School; Financial Research Network (FIRN); Centre for International Finance and Regulation (CIFR)

Date Written: September 8, 2015

Abstract

Retirement saving is an area now jam-packed with defaults meant to address delayed or absent decision making. Yet, getting individuals engaged with retirement saving decisions is critical to avoid unsuitable one-size-fits-all defaults and optimise accumulated wealth. We apply a market-segmentation approach to the problem based on two attitudinal motivators of behavioral engagement: trust and interest.

Our research sheds new light on why and how engagement occurs. Engagement grows with interest, yet engagement can also be motivated by low levels of trust. However, when interest is lacking, trust is related to reducing monitoring behaviour. This increases the vulnerability of individuals to exploitation exposing the “dark side of trust” (Gargiulo and Ertug 2006). Based on this interaction of trust and interest and how it feeds into engagement, a personalised approach by pension plan providers that addresses members’ diverse needs and means in terms of time, knowledge, and financial resources seems desirable.

Keywords: pension defaults, trust, engagement, retirement savings

JEL Classification: J26, J32

Suggested Citation

Deetlefs, J. and Bateman, Hazel and Dobrescu, Loretti Isabella and Newell, Ben and Ortmann, Andreas and Thorp, Susan, Suspicious Minds (can be a good thing when saving for retirement) (September 8, 2015). UNSW Business School Research Paper No. 2015-06A. Available at SSRN: https://ssrn.com/abstract=2575482 or http://dx.doi.org/10.2139/ssrn.2575482

J. Deetlefs

UNSW Australia Business School, School of Marketing ( email )

Sydney, NSW 2052
Australia

Hazel Bateman

UNSW Sydney, CEPAR ( email )

High Street
Sydney, NSW 2052
Australia

Loretti Isabella Dobrescu

University of New South Wales, School of Economics ( email )

High Street
Sydney, NSW 2052
Australia

Ben Newell

University of New South Wales (UNSW) ( email )

Kensington
High St
Sydney, NSW 2052
Australia

Andreas Ortmann (Contact Author)

UNSW Australia Business School, School of Economics ( email )

High Street
Sydney, NSW 2052
Australia

Susan Thorp

University of Sydney Business School ( email )

P.O. Box H58
Sydney, NSW 2006
Australia
+61 2 9351 6354 (Phone)

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

Centre for International Finance and Regulation (CIFR) ( email )

Level 7, UNSW CBD Campus
1 O'Connell Street
Sydney, NSW 2000
Australia

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