Saving for retirement can feel like giving money to a stranger. Forgoing money in the present to benefit the person we will eventually become—our “future self”—is often a difficult and ungratifying experience. Because of this and other behavioral barriers like the ones we uncovered in Mexico, it should come as no surprise that most people are not prepared for their retirement.
A healthy retirement is generally thought to be about 70% of a worker’s monthly salary, but Mexicans in the current pension system stand to receive roughly half the recommended amount, which has led to a high level of elderly poverty. With support from the Metlife Foundation, we are developing five interventions to help increase workers’ voluntary retirement savings, ranging from lighter-touch interventions like an improved account statement and text messaging reminders to more resource-intensive ones like changes in the protocols used by retirement account sales staff, known as promoters.
We’ll leverage the promoters’ personal interactions with workers to encourage take-up and ongoing use of automatic savings. Currently, these promoters seek to convince clients to transfer to their Afore—a pension fund administrator—from one of the other Afores. This transfer process presents a unique opportunity for a behavioral intervention as it often involves multiple phone calls and face-to-face conversations between pension clients and promoters.
To design effectively for this channel, we interviewed multiple promoters and observed their interactions with Mexican workers in client sales pitch situations. We identified three contextual features of their work with important implications for increasing take-up of automatic savings.
First, promoters are paid high commissions for transfers based on the account balance of the worker they transfer. Trying to encourage promoters to speak to workers about automatic savings, a service that won’t earn them as much commission, is likely to fail if it appears to compete with time spent on encouraging transfers. Fortunately, it’s not all about commission with promoters. We found that many are motivated and excited to help everyday workers save more for their retirement, and designing for this altruism could be an effective way promote to automatic savings.
Second, the technique that each of the promoters uses to encourage workers to transfer or sign up for automatic savings varies greatly. Convincing someone to switch companies or getting a worker to agree to talk to a promoter in the first place takes a personal touch, and we found that everyone has their own unique style for accomplishing this. This is an asset, so a design intervention shouldn’t restrict the individual techniques of the promoters. On the other hand, if the intervention is too flexible and subject to human differences, the core message of the behavioral design could be diluted or lost before reaching the end user, the worker. Striking this balance will be essential to creating an effective design in the promoter channel.
Finally, we observed that the promoters selectively mention automatic savings, not across the board. In a world of perfect information, promoters would already know which workers to target and which sales tactics to use. In reality, they don’t have this luxury and are constantly making informed guesses about clients: That’s a nice watch he’s wearing… this transfer is probably worth my time. Or She works in finance… I should probably talk about our financial returns. For an intervention that seeks to reach as many workers as possible, guesses can be detrimental: He’s 28, he probably doesn’t care about automatic savings yet. Paradoxically, promoters might exclude workers that appear to have fewer resources, yet it is exactly those workers who need those savings most. To have the broadest impact, our intervention will need to be designed in a way to ensure delivery to every single person the promoter meets.
These insights will help build the groundwork to navigate our design process. Through our understanding of the retirement savings landscape in Mexico, feedback from the retirement industry and academics, and many design iterations, we hope to arrive at a solution that dramatically improves the uptake of automatic retirement savings (and reduces poverty later in life) in Mexico. Stay tuned for further details about this intervention and its results.