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Suspicious Minds (can be a good thing when saving for retirement)

Author

Listed:
  • A.M.J. Deetlefs

    (School of Marketing, UNSW Business School, UNSW)

  • H. Bateman

    (School of Risk & Actuarial Stidies, UNSW Business School, UNSW)

  • L. Isabella Dobrescu

    (CEPAR and School of Economics, UNSW Business School, UNSW)

  • B.R. Newell

    (School of Psychology, UNSW Business School, UNSW)

  • Andreas Ortmann

    (School of Economics, UNSW Business School, UNSW)

  • Susan Thorp

    (Discipline of Finance, University of Sydney)

Abstract

Retirement saving is an area now jam-packed with defaults meant to address delayed or absent decision making. Yet, getting individuals engaged with retirement saving decisions is critical to avoid unsuitable one-size-fits-all defaults and optimise accumulated wealth. We apply a market-segmentation approach to the problem based on two attitudinal motivators of behavioral engagement: trust and interest. Our research sheds new light on why and how engagement occurs. Engagement grows with interest, yet engagement can also be motivated by low levels of trust. However, when interest is lacking, trust is related to reducing monitoring behaviour. This increases the vulnerability of individuals to exploitation exposing the “dark side of trust” (Gargiulo and Ertug 2006). Based on this interaction of trust and interest and how it feeds into engagement, a personalised approach by pension plan providers that addresses members’ diverse needs and means in terms of time, knowledge, and financial resources seems desirable.

Suggested Citation

  • A.M.J. Deetlefs & H. Bateman & L. Isabella Dobrescu & B.R. Newell & Andreas Ortmann & Susan Thorp, 2015. "Suspicious Minds (can be a good thing when saving for retirement)," Discussion Papers 2015-06A, School of Economics, The University of New South Wales.
    • Handle: RePEc:swe:wpaper:2015-06a
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    File URL: http://research.economics.unsw.edu.au/RePEc/papers/2015-06.pdf
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    References listed on IDEAS

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    Cited by:

    1. Geoffrey Kingston & Susan Thorp, 2019. "Superannuation in Australia: A Survey of the Literature," The Economic Record, The Economic Society of Australia, vol. 95(308), pages 141-160, March.
    2. Blake, David & Duffield, Mel & Tonks, Ian & Haig, Alistair & Blower, Dean & MacPhee, Laura, 2022. "Smart defaults: Determining the number of default funds in a pension scheme," The British Accounting Review, Elsevier, vol. 54(4).

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    More about this item

    Keywords

    pension defaults; trust; engagement; retirement savings;
    All these keywords.

    JEL classification:

    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions

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