Supporting retirees in retirement income planning
This study examined how people respond to a new income plan for retirement, known as a Comprehensive Income Product for Retirement (CIPR). A CIPR is a composite retirement income product which is intended to provide a balance of income, risk management (for example, longevity risk management) and flexibility to retirees. In response to a Financial System Inquiry1 recommendation, the Government has agreed to facilitate superannuation trustees pre-selecting a CIPR for their members at retirement. This study is a first step in building an evidence base to inform decisions about how best to present CIPRs to superannuation members in order to maximize comprehension, assist informed decision-making and alleviate cognitive load. Using insights from behavioural economics, we designed and tested a series of alternative presentations of information using a survey experiment based on a hypothetical CIPR.
Over 3,700 pre-retirement members across five industry and retail superannuation funds participated in the study. Members were asked to review information which compared a CIPR and an Account-Based Pension (ABP) (which is how most retirees currently manage their superannuation in retirement). Members were randomly assigned to view information about the two plans in one of eight conditions – minimal text descriptions (control); graphs showing estimates of income and assets over time; number tables showing numerical estimates of income and assets; text tables with text-based comparisons of income and assets; text tables with star ratings assigned to the plans and text-based comparisons of income and assets; and alternative versions of the text and number tables in which comparisons of income under each plan were highlighted in bold.