Motivated Saving: The Impact of Projections on Retirement Saving Intentions

61 Pages Posted: 15 Oct 2019 Last revised: 11 Oct 2021

See all articles by George Smyrnis

George Smyrnis

The University of Sydney Business School

Hazel Bateman

UNSW Sydney, CEPAR

Loretti Dobrescu

UNSW Australia Business School, School of Economics

Ben Rhodri Newell

Independent

Susan Thorp

The University of Sydney Business School

Date Written: October 5, 2019

Abstract

Can projections of retirement wealth and income motivate pension plan participants to save more? Results of field and online experiments show that participants who see both retirement balance and income projections increase voluntary savings. In the field study, conducted by a large Australian pension plan in 2013-14, participants of the treatment group received current balance, projected retirement balance and projected retirement income information, while participants of the control received only current balance information. Within one year of the treatment, the frequency, and average amount, of voluntary savings by treated plan participants rose significantly, as did the rate of participants’ interactions with the plan. In the related online experiment conducted in 2017, we tested the relative effect of information on (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 projected retirement income. Consistent with the field trial, the combination of retirement balance and income projections motivates a significantly higher retirement savings accumulation, after a sequence of ten savings decisions, than current balance information alone. Together our results strongly endorse recent changes to retirement plan benefit statement guidelines initiated by pension regulators globally.

Keywords: pensions, field experiment, benefit projections

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

UNSW Australia Business School, School of Economics ( email )

High Street
Sydney, NSW 2052
Australia

Ben Rhodri Newell

Independent

Susan Thorp (Contact Author)

The University of Sydney Business School ( email )

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

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
56
Abstract Views
677
rank
456,212
PlumX Metrics