The secret to engaging consumers in their superannuation could lie in helping them better imagine the future selves their retirement savings would be supporting, but funds will first need to better understand their members, according to Milliman.
The firm said that attempts to persuade members to save more super by used broad-based, one-size-fits-all targets had failed and a new approach was needed.
“Research suggests another path,” Milliman said. “When members are able to see their future selves in vivid and realistic detail, they are more willing to make choices today that may benefit them in years to come.”
It believed that this could help mitigate the effects of hyperbolic or temporal discounting, which makes people care less about future outcomes that present ones.
According to academic Hal Hershfield, “when the future self shares similarities with the present self, when it is viewed in vivid and realistic terms, and when it is seen in a positive light, people are more willing to make choices today that may benefit them at some point in the years to come.”
Milliman warned that to connect members’ present selves with their future ones would require super funds to understand them “far deeper”. It suggested the use of data analytics could help do so.