Behavioural Insights

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Behavioural insights and social security
22 April 2021 | ISSA Webinar
Behavioural Insights in Singapore’s Retirement System
Gregory Chia, Group Director, Policy, Statistics and Research
Central Provident Fund Board, Singapore

2. www.issa.int
ISSA webinar on behavioural insights and social security
22nd April 2021 | ISSA Webinar
Behavioural Insights in
Singapore’s Retirement System
Mr Gregory Chia, Group Director (Policy, Statistics & Research)
Central Provident Fund Board, Singapore
Copyright 2021 Central Provident Fund Board. All rights reserved.
Reproduction without prior consent by Central Provident Fund Board is strictly prohibited.

3. slide 2
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Retirement Home Ownership Healthcare
CPF is a defined contribution (DC) system covering retirement,
housing and healthcare needs
Central Provident Fund (CPF)
Fully-funded DC with individualised accounts
Contribution mandatory for Singaporeans/Permanent Residents [4.1m Members, fund size S$462b (US$346b)]1
1As at 31 Dec 2020

4. slide 3
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CPFB incorporates behavioural insights to help overcome barriers
to preparing for retirement
Info & choice overload
Retirement planning involves
complex decisions
Status quo bias
Inertia when making
decisions
Present bias
Ca ’t re og ise future e efits of
planning for retirement now
Behavioural Barriers
Useful behavioural insights in policies & member engagement
Defaults /
Auto-enrolment
Incentives
Nudges /
Framing
Convenience
Education

5. slide 4
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Self-Employed Persons (SEPs) face challenges in contributing to
their CPF
Time-lag
May have already spent or reinvested their
earnings in their business before being informed
of their CPF obligations
Cash-flow issues
Some are unable to earn enough in the
following year to make their MA
contributions
SEPs face challenges in making mandatory contributions
• SEPs are required to self-contribute to their MediSave Account (MA) at the end of the year
based on their annual Net Trade Income
• However, some have not been keeping with their obligations

6. slide 5
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Helping SEPs keep up with contributions: “Contribute-As-You-
Earn” (CAYE) model
To help SEPs keep up with their contributions, we piloted CAYE for SEPs who provide
services to the Government from 1 Jan 2020.
A portion deducted and
tra s itted to SEPs’ MA
Remainder paid to SEP
Service
Fee
SEPs’
MediSave
Self-
Employed

7. slide 6
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Encouraging participation in CAYE pilot
In 2020, the first year of implementation, about 95% of SEPs remained on CAYE.
✓ Auto-enrolling members into the pilot
✓ Framing comms to highlight convenience and
benefits
✓ Matched contributions for participation
• Matched MediSave Contribution Scheme
– Govt matches contributions of up to $600
Infographic to highlight benefits of scheme
Nudges /
Framing
Defaults /
Auto-enrolment
Convenience Incentives
BI Applied:
BI Applied

8. slide 7
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Defaults /
Auto-enrolment
BI Applied:
BI Applied
CPF Lifelong Income for The Elderly (CPF LIFE) provides lifelong
retirement income by pooling risks
• National annuity scheme introduced in 2009 on opt-in basis
• From 2013, automatic inclusion for members born in 1958 or later, with at least S$60,000 in CPF at age 65.
• Members use Retirement Account savings to purchase the annuity when they apply to start retirement payouts
Available CPF LIFE Plans
Escalating Plan Standard Plan Basic Plan
Monthly payouts start lower
but increase by 2% yearly
Higher level monthly
payouts
Lower
monthly payouts

9. slide 8
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Framing CPF LIFE to encourage participation
✓ Desig ed a d o u i ated as ha i g a refu da le
feature, here ea h e er ill i i ally re ei e their
premium amount in payouts and/or bequest
Reducing loss aversion
Simplifying complex financial products for better understanding
✓ Reducing technical and negative terms e.g. replacing
"lo ge ity i sura e" ith "lifelo g i o e“
✓ Use of engaging visuals to comms info quickly and clearly
Nudges /
Framing
BI Applied:
BI Applied
CPF LIFE collateral

10. slide 9
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Encourage members to top up their CPF savings voluntarily
Matched Retirement
Savings Scheme (MRSS)
Incentives: Govt matches1 every dollar of cash top-
up for eligible members with less CPF balances
Top-ups through PayNow QR
Allows top-ups more conveniently
In 2021, 440k members (53% of those aged
55 to 70) will be eligible for the scheme.
In 2018, more than 4.2k top-ups (totaling
close to S$20M) were made via QR code.
1Up to annual cap of $600 for 5 years
Incentives Convenience
BI Applied

11. slide 10
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Helping CPF members to make more informed financial decisions:
Revamped Yearly Statement of Accounts (YSOA)
Nudges via personalised messages and tips
(e.g. how to build up retirement savings)
Personalised breakdown of CPF savings utilised
for life s i porta t eeds (e.g. housi g,
healthcare, retirement etc.)
Nudges /
Framing
Convenience Education
BI Applied:
BI Applied

12. slide 11
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Risk-free interest
Savings in CPF accounts earn risk-free
interest rates of up to 6% p.a.
Members earn high risk-free interest by default, but have the
flexibility to invest actively to grow their savings
Default Option
CPF Investment Scheme (CPFIS)
Many investment choices available
For knowledgeable investors
confident of investing actively
A member who is willing to take risk
may not have the knowledge to invest
More than half of respondents who were investing
said they had limited investment knowledge
Introduction of
Self-Awareness Questionnaire (SAQ)
Defaults /
Auto-enrolment
BI Applied:
BI Applied

13. slide 12
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Encouraging members to assess their suitability of investing via
CPFIS: Self-Awareness Questionnaire (SAQ)
Risk tolerance questionnaire raises awareness of
potential risk biases, and nudges members to
consider their risk tolerance before investing
You should
consider leaving
your savings in your
CPF accounts to
earn the risk-free
CPF interest rates.
Nudges /
Framing
Education
BI Applied:
BI Applied
CPFIS SAQ starts with learning modules on investment concepts and products, and ends
with a 20-MCQ Quiz to check their understanding
Quiz pro ides feed a k o e ers le el of asi
financial knowledge, nudging members to consider
their suitability for CPFIS
You should improve
your financial
knowledge before
investing your CPF
savings.
E.g. Scoring from Risk Tolerance Questionnaire in Learning Module E.g. of messages (scoring-dependent)
Only invest if you
can afford to take
investment risk and
are confident of
earning more than
the CPF interest
rates.

14. slide 13
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Engaging members with personalised info to make informed
decisions in retirement: CPF Retirement Planning Service (CRPS)
Personalised materials for members turning age 55/65 to go through relevant CPF policies/options
More than 95% of members who attended CRPS sessions would recommend it to others
<extract> …start your o thly
payouts only when you need
them as your Retirement
Account savings will earn
interest to increase the
amount of your monthly
payouts
Framing messaging
to nudge members
to keep their monies
in CPF for longer
Extract from materials for CRPS at 65
Nudges /
Framing
Education Convenience
BI Applied:
BI Applied

15. slide 14
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Example of personalised CRPS materials
Personalised CRPS materials to inform members of their options and implications

16. slide 15
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CPFB’s overall experience with BI
✓Incorporating defaults is effective in nudging behavior, particularly with inertia/uncertainty in
complex decision-making
E.g. CAYE model
✓Framing complex concepts simply helps to resonate with members
E.g. CPF LIFE
✓Personalising nudges is useful in encouraging retirement planning
E.g. CRPS
CPF Board will continue to conduct studies to better understand members' behaviours, and
incorporate behavioural insights into our policies and comms
What works well
Copyright 2021 Central Provident Fund Board. All rights reserved.
Reproduction without prior consent by Central Provident Fund Board is strictly prohibited.
Credits: Icons retrieved from Flaticon.com

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