Title
Contents
Acknowledgements 5
The Authors 6
Summary 7
1. Introduction 13
1.1 Background 13
1.2 Purpose 13
1.3 Our approach 14
1.4 Report structure 14
2. Saving for retirement: The relationship between theory and practice 15
Chapter summary 15
2.1 Introduction 15
2.2 The life cycle model 16
2.2.1 Price motive 17
2.3 Tensions between theory and practice 18
3. Barriers that limit the explanatory power of savings theory 21
Chapter summary 21
3.1 Introduction 22
3.2 Informational and attitudinal barriers to saving 23
3.2.1 Level of understanding and financial capability 23
3.2.2 Seeking information, guidance and advice 29
3.2.3 Other perceptions, misperceptions and decision processes that can act as barriers 33
3.3 Structural barriers to saving 37
3.3.1 Complexity of the pension system 37
3.3.2 Role of the tax/benefit system 37
3.3.3 Private sector pension coverage 39
3.4 Behavioural barriers to saving 39
3.4.1 Myopia 39
3.4.2 Cynicism 41
3.4.3 Inertia 42
4. Overcoming barriers to saving 45
Chapter summary 45
4.1 Introduction 45
4.2 Financial education, information and guidance 46
4.3 Financial incentives that affect the price of saving 47
4.3.1 Tax relief 48
4.3.2 Employer contributions 49
4.3.3 Automatic enrolment and other reforms 50
5. Conclusions 55
5.1 Precis of main findings 55
5.2 Quality of reviewed research 56
5.3 Conflicting findings and gaps in the reviewed research 56
References 59
Table 3.1 Perceptions of different savings and investments 34
Figure 3.1 Links between different barriers to saving 22