Pension scheme defaults: questionable foundations and unconsidered outcomes

Abstract

Inertia, the behaviour of doing nothing and allowing the current situation to prevail, is reported in many empirical pension studies. However, the reasons for the behaviour are not agreed. Various explanations include: fear of loss when decisions involve risk; cognitive limitations encountered when decisions are complex; inability to assess the costs of action and inaction; and a lack of self-control that inhibits proactive behaviour.