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Saturday 15 December 2018


Spring Conference

Financial education has minimum effect on Dutch consumers' pension choices

Written by Ilonka Oudenampsen

Financial education barely has an impact on the pension choices of Dutch consumers, it has been revealed.

Instead, pension providers should limit the number of complex choices and appeal to emotions, research institute Netspar has said based on literature research and an international comparison.

Netspar noted there is very little scientific basis for the theory that financial education leads to better pension choices.

“A greater number of options for pension investments often leads to no decisions and to worse (less deliberate) decisions. Furthermore, it seems people are often (unconsciously) following their intuition, especially if they feel the choices are complicated. The feeling evoked by language has a great impact on this. On top of that, people systematically postpone saving for retirement and they are sensitive for what is being offered as the ‘silent choice’ (silence implies consent).”

Language plays a major part in the choice consumers eventually make, the research institute said. For instance, the use of the word ‘important’ seems to have a negative impact on the attention people pay to pension communication.

"The explanation is that this word is being associated with difficult and time consuming, which results in people deciding to look at it later, but which is then often forgotten.”

Netspar said that it is essential that pension providers and boards of pension funds that shape pension choices take into account how people make decisions. “Only then can freedom of choice create the added value that it could offer.”

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