Seminar: "Retirement drawdown defaults: the role of implied endorsement"

Implied endorsement is considered, together with inertia, as an explanation of the stickiness of defaults. This paper explores whether implied endorsement can serve as a potential explanation of the stickiness of defaults in the retirement decumulation phase. Using an experimental survey fielded in both the Netherlands and Australia, we analyze whether individuals perceive obligatory minimum withdrawals from their pension wealth set by the government as an implicit advice by the government ("government knows best") or to be induced by peers ("what most people do"). Vulnerable groups, those with low financial resources and pension capabilities, are more likely to find the implied endorsement important. However, people who are overconfident about their capabilities find the implied endorsement less important and could be more likely to make adverse choices. Those with a smaller social network have less opportunity to benefit from the peers effect.