Canadians’ retirement perceptions and behaviours 2

On July 27, 2018, a research study entitled Encouraging Retirement Planning through Behavioural Insights. The study identifies and presents thirty different initiatives and tactics in which pension and savings plan sponsors can apply behavioural insights to promote retirement planning and help their plan members overcome challenges people experience in creating personal financial plans for their retirement. The initiatives presented are organized around four primary challenges people face in their retirement planning:

• Difficulty in starting.

• Procrastination.

• People can feel overwhelmed and quit the process.

• Difficulty in obtaining good advice.

Some examples of the thirty initiatives recommended to deal with these challenges include:

• Integrating retirement planning into the onboarding process for new employees.

• Prompting people to make a retirement plan at times when they are likely to feel positive about their financial situation (e.g. after a raise, bonus or tax refund).

• Capitalizing on moments that people tend to think about the future (e.g. birthdays, when drawing from children’s registered education savings plans).

• Emphasizing the short-term benefits of retirement planning by creating a near-term incentive.

• Combating optimism bias by providing relevant benchmarks.

• Helping people build confidence and comfort talking about their finances by providing a structure for conversations.

Three of the thirty recommended initiatives were tested using a randomized control trial experiment, in which over 70,000 Ontario Public Service employees were provided with different newsletter messages prompting them to use an employer-sponsored online retirement income calculator.

The experiment found that messages that help people to imagine their social selves in retirement by evoking thoughts of time spent with friends and family can be highly effective in getting people to engage in retirement planning. The experiment also found that messages expressing that retirement planning can be simple and easy the process can be quite effective in moving people from an initial spark of interest into more concrete action.