It’s natural to think that financial education is a vital part of any programme to help people save for retirement. However, the evidence for this is mixed. Past efforts to use education to encourage retirement savings have had limited success. As a result, policy-makers around the world have instead adopted behavioural finance solutions. They’re finding that nudges and defaults can deliver the levels of mass participation that were unachievable through an ‘informed choice’ approach. However, the case for financial education in defined contribution pensions has yet to be fully made.
About the project
Recent research suggests that that the failure of previous education efforts may be a result of the content, format and delivery channel of the financial education materials being used. Alternative approaches may yet prove effective. In particular, several recent studies have shown that education modules that are delivered online can improve financial literacy and self-efficacy.
To date, this work has only measured the impact of this approach on financial literacy and behavioural intention. This is why NEST Insight now plans to investigate the behavioural impacts of modular, ‘just in time’ financial education. We’re working on a project to develop and test materials that are suitable for the NEST population. The study will also explore the role that employers can play in delivering educational materials.