Pension communication, knowledge, and behaviour

Steven Debets,Arthur Van Soest,Henriette Prast,Mariacristina Rossi

doi:10.1017/s1474747220000232

Abstract

AbstractMany recent pension reforms require individuals to make more decisions on supplementary savings, investment choices, etc. Governments and the pension industry try to assist individuals through pension communication but little is known about the effectiveness of such policies. This paper uses Dutch longitudinal data to analyse the causal links between communication, pension knowledge, and conscious pension decision-making. A robust finding is that pension knowledge has a positive causal effect on active pension decision-making. Providing an annual pension statement might have a small positive effect on pension knowledge, but this result is sensitive to the identifying assumptions.

Highlights

In the Netherlands and many other countries, recent pension reforms and other labour market changes have made pension benefits based upon mandatory participation in public or occupational pension schemes less generous than before
We find that pension knowledge has a positive causal effect on active pension decision-making
Note that specification 4 is not rejected by the data, it assumes that there is no immediate effect of pension knowledge on the answer to the question whether someone received a uniform pension overview

Summary

Introduction

In the Netherlands and many other countries, recent pension reforms and other labour market changes have made pension benefits based upon mandatory participation in public or occupational pension schemes less generous than before (see, e.g., European Commission, 2018). Many studies have discussed how to help individuals to make pension-related decisions that are in their own long-term interest They have shown that context, timing, defaults, and the organization of the decision process (e.g., decision steps and their order) have large effects on pension saving and ultimate choice outcomes (‘choice architecture’, see, e.g., Thaler and Benartzi, 2004). We find that pension knowledge has a positive causal effect on active pension decision-making. This finding is quite robust for the identifying assumptions driving the specification of the model. Providing an annual pension statement might have a small positive effect on pension knowledge This result, is sensitive to the identifying assumptions

Pension communication

Pensions and pension communication in the Netherlands

Empirical analysis for the Netherlands: data and descriptive statistics

Models explaining active pension decision-making

Conclusions