The Ontario Securities Commission (OSC) published on July 27 a study which identifies ways in which organizations can apply behavioural insights to promote retirement planning.
The research study, Encouraging Retirement Planning through Behavioural Insights, was prepared by the Behavioural Insights Team (BIT) in collaboration with the OSC. It looks at challenges people experience in moving from the intention to create a retirement plan to actually having one. It also provides interventions aimed at making retirement planning easier.
Small roadblocks can have a paralyzing effect
"When it comes to preparing for retirement, even seemingly small roadblocks can have a paralyzing effect," says Tyler Fleming, Director of the Investor Office at the OSC. "Our study identifies evidence-based approaches that organizations can use to address these barriers and encourage retirement planning."
The common barriers identified in the report include the perceived length and complexity of retirement planning, as well as a tendency to ignore the future and be overly optimistic about savings, and discount long-term needs.
Break it down into small steps
Suggested interventions to counter these barriers “include breaking retirement planning into a series of small steps; nudging people at moments when they are likely to be thinking about the future (such as birthdays); highlighting short-term psychological benefits of having a plan in place (such as the opportunity to build financial confidence and security) and prompting individuals to think about the friends and family they will be able to spend more time with in retirement,” says the OSC.
The research findings and recommendations were developed based on a literature review, and qualitative research with pre-retirement Ontarians and financial planners.
Randomized control trial
Several of the approaches recommended in the report were also tested using an experiment involving a randomized control trial, explains the OSC. Conducted over a three-week period in early June in partnership with the Government of Ontario and the Government of Canada, the experiment involved sending different messages to more than 70,000 Ontario public service employees encouraging them to use an online retirement income calculator.
To learn more, consult the study on the OSC’s website.