Retirement savings trajectories: An analysis of the experience of fund members. Part Two: Individual and Peer Moderation Effects on Member Investment Choice

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This paper explores the role of peers in a member’s propensity to make a change to their retirement savings investment strategy. Given that evidence indicates that the majority of individuals do not seek professional financial advice, we investigate whether workplace peers may be influential in member retirement savings investment strategy behaviour. We explore three ways a peer influence may manifest. First, we examine whether the likelihood that an individual makes an investment strategy change is related to what their sub-plan peers do. Second, we explore whether the concentration of one gender in a sub-plan is associated with the individual member’s likelihood of changing investment strategy. Third we explore if the previously documented gender effect, specifically the over propensity to trade among males, is moderated by the gender critical mass of a worker’s retirement savings plan peers.

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This Working Paper was produced by the CSIRO-Monash Superannuation Research Cluster a collaboration between the CSIRO and Monash University, the University of Western Australia, Griffith University and the University of Warwick in the United Kingdom. In addition, the Cluster engages on an ongoing basis with a range of industry supporters, government agencies and industry peak bodies who assist in providing guidance and feedback to researchers, providing data, and in disseminating outcomes. The purpose of the Super Research Cluster is to examine issues pertaining to the future of Australia’s superannuation and retirement systems.