Vision Super has helped implement a new program based on behavioural economics at Mount Alexander Council, with more than 70 per cent of employees signing on to help increase their superannuation savings.
The program, known internally as ‘Save more later’, was based on behavioural economics suggesting that people value their future self less than their current self.
Council employees could opt into the program, which divides pay rises between staff members’ pay packets and their superannuation contributions, as part of a three-year enterprise agreement that was approved by Fair Work Australia last October.
“Our research suggested that if you ask people to save more now, they are likely to say no, even when you give them all the information about why they need to save more to have a comfortable retirement,” Stephen Rowe, Vision Super chief executive said.
“But if you ask them to save money they don’t have yet – for example from a future pay rise – they’re very likely to agree.”
Darren Fuzzard, Mount Alexander Shire chief executive said that the program could improve the financial wellbeing of Council employees, which could in turn have a big impact on workplace morale and productivity.
He had been pleasantly surprised by how engaged staff were in the program.
“What we never expected was the number who got so engaged with the process, that they sat down and looked at what they might need to retire, then actually increased the amount they were contributing over and above the levels in the enterprise agreement – nearly a quarter of employees did so,” Fuzzard said.
Rowe said that there were currently a number of enterprise agreements being negotiated or finalised that included the ‘Save more later’ program.