Does personalized pension projection affect the retirement decision?

Since 2005, instructed by the Superintendence of Pensions, the Pension Funds Administrators (AFP) send, as part of the last four-monthly report of each year, the Personalized Pension Projection (PPP) to the members of the Chilean Pension System. This projection, which objective is to improve the level of education regarding pensions among the system members, presents, for the groups of members closer to the legal age of retirement, the projection of their pension at the legal age and also a projected pension if the retirement is postponed for three years. The pension information projected in different retirement age scenarios might cause the members to review their retirement decisions, with the objective of increasing the amount of their final pension. This paper assesses the impact of the PPP in the years of 2005 and 2006 on the probability of retiring in the year of 2011. Results reveal that there is evidence that the information in the PPP reduces the probability of retirement for those members who received the PPP in both, years 2005 and 2006, which is not the case for those who received it only once. This would account for the fact that a group of members would seek to maximize the return on investment by continue to pay their contributions to the system beyond the legal age of retirement, if they are allowed by the labor market to do so. It is found that the impact is heterogeneous and greater in members with high mandatory pension savings, and with greater cognitive and non-cognitive abilities.