Motivated Saving: The Impact of Projections on Retirement Saving Intentions

44 Pages Posted: 15 Oct 2019

See all articles by George Smyrnis

George Smyrnis

The University of Sydney Business School

Hazel Bateman

UNSW Sydney, CEPAR

Loretti Dobrescu

University of New South Wales, School of Economics

Ben Rhodri Newell

Independent

Susan Thorp

The University of Sydney Business School

Date Written: October 5, 2019

Abstract

The implications of current balance information for retirement provision are considerably difficult to grasp or anticipate. We study how balance and/or income projections motivate the voluntary savings intentions of pension plan participants over a sequence of ten choices. To this effect, we collect savings intentions from 1,615 respondents aged 25-57 years via an online experimental survey that compares four different formats for retirement account information. The formats are (i) current balance; (ii) current balance and projected retirement balance; (iii) current balance and projected retirement income; and (iv) current balance, projected retirement balance and retirement income. Regardless of information format, merely inviting plan participants to top up their retirement account prompts substantial increases in savings, especially among older respondents. At the first choice round, the income projection triggers marginally more voluntary saving intentions than the lump sum projection alone. However at both the first choice and over sequential choices, the combination of balance and income projections is what matters most. Furthermore, even though older respondents save at a higher level across all treatments, younger respondents are more sensitive to income balance projections than the older survey respondents.

Keywords: pension, projection, saving, consumer finance

JEL Classification: G41, G51, J26

Suggested Citation

Smyrnis, George and Bateman, Hazel and Dobrescu, Loretti Isabella and Newell, Ben Rhodri and Thorp, Susan, Motivated Saving: The Impact of Projections on Retirement Saving Intentions (October 5, 2019). Available at SSRN: https://ssrn.com/abstract=3464813 or http://dx.doi.org/10.2139/ssrn.3464813

George Smyrnis

The University of Sydney Business School ( email )

21-23 Codrington St, Darlington
H69 Codrington Building
Sydney, NSW 2008
Australia
0290366354 (Phone)
2006 (Fax)

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 Rhodri Newell

Independent

No Address Available

Susan Thorp (Contact Author)

The University of Sydney Business School ( email )

Abercrombie Building
H70
The University Of Sydney, NSW 2006
Australia
0290366354 (Phone)

Register to save articles to
your library

Register

Paper statistics

Downloads
13
Abstract Views
116
PlumX Metrics