'Pension organizations: Show people that growing pile of money!'

Published on: 12 March 2019

According to brain scientist Victor Lamme, pension organizations are pushing the wrong buttons in the human brain.


Imagine being given the choice between receiving 1,000 euro now or 2,000 euro in two years. Which do you choose? Almost everyone would choose to receive 1,000 euro now, according to a classic psychological study. All while some patience would produce double the yield and therefore be much more sensible. But unfortunately, people’s choices are often not rational. They are led by their brain, which is much less sensitive to a future reward than to a reward in the present. I want it and I want it now!


Not that button!

This is one of the insights brain scientist Victor Lamme likes to share with the pension sector. According to him, the sector is pushing all the wrong buttons in participants’ brains when communicating about pensions. As it turns out, our brains associate the simple word ‘pension’ with negatively charged terms like ‘death,’ ‘illness,’ and ‘poverty.’ And in recent years, threatening concepts like ‘insufficient funding ratio,’ ‘cuts,’ and ‘indexation scrapping’ have been added to the mix.


UPO in the recycling

This promotes fight or flight behavior in participants: they distrust their pension funds or ignore the topic of providing for their old age and put their UPOs out with the recycling without reading them. In response to this, the pension sector is attempting to increase transparency and ramping up communication efforts. However, according to Lamme this only serves to exacerbate the crisis of confidence and people’s sense of indifference. But he also says the solution is exceedingly simple: just push the right buttons in the brain.


So what exactly are we doing wrong?

‘Dutch pensions have become one great circus of uncertainty. The pensionable age keeps getting pushed up, funding ratios are up and down due to the low interest rate, and no firm promises are ever made in the UPO. As a result, people don’t know where they stand: when can they retire and what will they get when they do? And people dislike uncertainty. It scares us, and this fear activates our amygdala. The amygdala is the part of our brain that makes us either flee, get angry, or stick our heads in the sand. So uncertainty undermines support for a mandatory collective pension system as well as people’s trust in the system.’


To restore this trust, the pension sector is trying to offer participants maximum transparency. 

‘A knee-jerk reaction: “Don’t worry, we will explain it all.” This is a big mistake, because all of the explaining is counterproductive and serves to destroy the last remnants of trust. If you mention everything, there is always one negative thing among ten positive things - and the negative one will stick around in our brain. So by summing up all of the factors that may threaten the future pension, you are actually aggravating feelings of insecurity and fear. Moreover, transparency can work as a perverse incentive. Pension organizations may think: I will just put every risk imaginable out there for people to see, at least that way I have informed my participants.’     


So what should we do instead?

‘If you want to restore confidence, you have to play into the need for security and the healthy level of greed inherent in every human. Show participants what’s in it for them. Pension organizations triple participants’ contributions: show people that growing pile of money! The Personal Pension Pot is a step in the right direction, but you can take this concept much further. Have the UPO state: This is the amount you will definitely get, and it could be even more. After all, doctors tell their patients that they are cured, even though they know there is always a small chance that the illness could return. Pension organizations should not be afraid to put on those big boy pants too, this will help restore consumer confidence.’


But DNB and AFM do not allow these kinds of statements.

‘Who contracted the pension organizations to manage the pension assets? The supervisory authorities? No they did not. Their contract is with the social partners: employers and employees. Pension organizations must show their true colors: they should brave an argument with the supervisors and take a public stand, firmly behind their participants’ interests.’


Or else?

‘The crisis of confidence will only deepen and support for the mandatory pension system will crumble even further. That’s when we’ll be in real trouble, because voluntary pension saving is often put on the back burner. Just look at all of those freelancers with no pension. If people are forced to choose between going on holiday and setting money aside for later, our brains will choose the short-term reward. As such, a collective mandatory pension is better from a psychological perspective, too. People are social beings, they want to be part of something. Pension organizations should take more advantage of that herd mentality, because we can do more if we band together than if we continue to scavenge the desert alone.’



On Wednesday, March 6, ABP and APG organized the so-called pension café in the Schreierstoren in Amsterdam. An informal meeting where Corien Wortmann, Chief Executive Officer at ABP, and Gerard van Olphen, CEO of APG, spoke with pension specialists from De Telegraaf, FD, NRC, ConsumentenGeldGids, and PensioenPro, among others. The meeting, which was the second of its kind, dealt with the theme of smart simplicity in pension communications. Professor and neuroscientist Victor Lamme was the guest speaker. Lamme had written a fable about the pension sector for the occasion. This fable was the reason for the interview presented here, which contains another clear explanation of the professor’s tantalizing view of the sector. Gerard van Olphen: ‘Victor Lamme’s argument is invigorating, no doubt. I won’t get into his assessments of the different players in the pension sector, but I fully endorse his claim: “you are an organization of and for the participant and should be more audacious”.


Victor Lamme (1959) is a professor and cognitive researcher at the Psychology department of the University of Amsterdam. Among other things, he wrote books entitled ‘De Vrije Wil Bestaat Niet’ (‘Free Will Does Not Exist,’ 2010) and ‘WAAROM? Op zoek naar wat ons werkelijk drijft’ (‘WHY? In search of our true motivations,’ 2016). In addition, he is a partner in Neurensics, a research agency for neuromarketing. Moreover, he is an in-demand speaker and actively participates in societal debates.