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The Effect of Different Saving Mechanisms in Pension Saving Behavior: Evidence from a Life-Cycle Experiment

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  • Martin Angerer

    (Liechtenstein Business School, University of Liechtenstein, Fürst-Franz-Josef-Strasse, 9490 Vaduz, Liechtenstein)

  • Michael Hanke

    (Liechtenstein Business School, University of Liechtenstein, Fürst-Franz-Josef-Strasse, 9490 Vaduz, Liechtenstein)

  • Ekaterina Shakina

    (Newcastle Business School, Northumbria University, Newcastle upon Tyne NE1 8ST, UK)

  • Wiebke Szymczak

    (Halle Institute for Economic Research, 06108 Halle (Saale), Germany)

Abstract

We examine how institutional saving mechanisms influence retirement saving decisions under bounded rationality and income risk. Using a life-cycle experiment with habit formation and loss aversion, we test mandatory and voluntary binding savings under deterministic and stochastic income. Voluntary commitment improves saving performance only when income is predictable; under uncertainty, it fails to improve performance. Mandatory savings do not raise total saving, as participants reduce voluntary contributions. These results emphasize the role of income smoothing in enabling behavioral interventions to improve long-term financial outcomes.

Suggested Citation

  • Martin Angerer & Michael Hanke & Ekaterina Shakina & Wiebke Szymczak, 2025. "The Effect of Different Saving Mechanisms in Pension Saving Behavior: Evidence from a Life-Cycle Experiment," JRFM, MDPI, vol. 18(5), pages 1-26, May.
    • Handle: RePEc:gam:jjrfmx:v:18:y:2025:i:5:p:240-:d:1647581
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