Professor Gough, Head of the Finance and Business Law Department at Westminster Business School, faced fierce competition for funding as her project was submitted to the very last British Academy Small Grant competition; it was estimated that there were three times as many entries for funding compared to the last call. The project is due to commence in December 2011 and will span the breadth of a year. The funds will cover the cost of a small pilot study examining 500 individuals and will define the key factors surrounding their incentive to save for their retirement.
The grant will increase the understanding of why there is consistent under-saving in the UK for pension schemes; whilst UK pension reforms are increasing individual responsibility for retirement saving, an estimated seven million people in the UK have under-saved for their retirement. Two competing explanations have been proposed for this problem:
- people are not financially literate and require more financial information and education; and
- individuals have self-control problems and should be automatically enrolled in saving schemes.
Both perspectives have influenced policy making significantly but it is not clear which should be prioritised in public spending. There have been no studies comparing their relative effectiveness. Orla’s project will fill this gap by quantifying the relative impact of different factors to predict low retirement savings and the results of this project are expected to impact upon future policy decision making.