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Chile: People who received customized data increased their voluntary savings by up to 13%

14 March, 2019

Many people have high pension expectations, but once informed of the level of their savings, they realize that they do not meet their expectations. However, additional information could influence and improve retirement savings.

According to the study “Customized information as a tool for improving pension savings: Results of a random control trial in Chile,” people who received customized information regarding their future retirement increased contributions to their Voluntary Pension Savings accounts in their AFPs by 13% on average.

The document – prepared by Olga Fuentes, of the Chilean Pensions Commission, Jeanne Lafortune and José Tessada, of the Catholic University of Chile, and Julio Riutort and Félix Villatoro, of Adolfo Ibáñez University, reveals that after customized information was provided, the probability and amounts of voluntary pension contributions increased after one year, without affecting other forms of savings. The change was also more notable among people who overestimated their pensions at the time of the study.

“The inability of individuals to understand how the pension system affects then, can partially explain low pension savings,” the study notes.

It also adds that adequate provision of information must be combined with other elements to increase its efficiency.

Julio Riutort, an academic from the UAI Business School, says that members currently receive customized monthly reports of their savings amounts and their composition. They also receive a quarterly statement with the composition of their savings accounts and a breakdown of variations due to contributions, returns and commissions.

However, it states that despite the fact that this information is sent to all members and is available on the web pages and apps of the AFPs, and that pension simulators providing customized pension estimates are available in the Chilean Pensions Commission and all fund managers, the results consistently show that people are not entirely aware of this information.

“It is relatively easy to make information available, but what is apparently more difficult is for people to consult it in a timely manner. Hence, instead of increasing the amount of customized information available, it may be a better idea to concentrate on possible barriers for accessing that information, and furnish better means of delivery,” says Riutort.

Source: http://www.economiaynegocios.cl

Date: 04.02.2019

 

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