The following is from a Morneau Shepell, newsletter. Morneau Shepell is the only human resources consulting and technology company that takes an integrated approach to employee well-being to meet health, benefits and retirement needs.
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.
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