Some theories about the way people save have been repeated so often that we have all accepted them as fact, but research suggests we shouldn't be so sure.
Last week, the National Employment Savings Trust (NEST) forum brought together some of the top thinkers on saving from around the world.
Their research blows some of the home truths about saving wide open.
Big employer contributions motivate people to save
Some theories about the way people save are now mistakenly accepted as fact
IFAs use this as a selling point when talking to employees about joining their company pension scheme. For the sake of putting aside a measly 3% of their earnings, tax efficiently, employees effectively get a pay rise.
It follows that the higher the employer contribution, the more of an incentive to save there is, but it's not that simple. According to research by Professor Michael Sherraden, of the University of Washington, St Louis, employees are only motivated to save when employers match their contribution.
If employers increase their contributions, employees are actually demotivated to save, Sherraden's said.
Government saving schemes are always a disaster
The failure of stakeholder is often used as an argument against government interference in saving. IFAs have claimed there is no need to compel people to save. Others said that NEST itself is an unsatisfactory product which will be mis-sold to people who want better investment growth. All of this is before anyone considers what a mess the state pension system is in.
However, government intervention in saving can work, Dr Claire Matthews of Massey University, New Zealand argued. Far from ignoring New Zealand's popular Kiwisaver scheme, Matthews' research claimed just 11% of people opted out. Rather than resenting it, more than half of people with Kiwisavers recognised the importance of saving for retirement once they had been nudged into it.
The more financial education, the better
Showing people where their money is behaving inefficiently and how they can make or keep more will naturally lead to better habits, but there is the risk of overkill.
Professor Sherraden's research suggests that people's appetite for saving improves with up to ten hours of financial education. However, anything beyond ten hours makes very little difference to their attitudes, he claimed.
People on low incomes will hate saving
Many people have questioned whether now is the best time to start elbowing low earners into locking away up to 3% of their hard-earned cash every month. There are fears people on low incomes will resent the idea of being nudged into saving.
However, Professor Margaret Sherraden of the University of Missouri claimed that her research shows having clear savings goals gave the lowest earners a sense of hope.
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