The Inter-American Development Bank (IDB) has launched the Retirement Savings Laboratory, a project that seeks to increase the number of people saving for retirement in Latin America and the Caribbean.
The Washington-based financial institution said most workers in Latin America and the Caribbean – about 130 million people – are not saving for retirement, “which will make it difficult for them to have a good life when they reach old age, especially for low-income and independent workers.”
The IDB said the main causes of under saving for retirement are problems in the way labor markets function, the design of pension systems and the psychological barriers inherent to human nature.
“This explains why, although the surveys show that workers in the region want to save, few can do so,” ECLCA said.
Therefore, in order to encourage more workers in the region to save for their retirement, the IDB said it launched the Retirement Savings Laboratory.
“This initiative seeks innovative ways to encourage savings through interventions based on behavioral economics and the use of new technologies,” the IDB said.
It said the project plans to carry out more than 15 interventions with financing from the MetLife Foundation, the IDB Group’s Multilateral Investment Fund, and the IDB Network for Pensions in Latin America and the Caribbean (PLAC Network).
The goal is for 400,000 low-income workers to start saving for their old age, the IDB said.
“The progressive aging of the population makes the lack of pension savings one of the main challenges that the region will face in the future,” said Carmen Pagés, chief of the Labor Market Division of the IDB.
“The use of behavioral economics and technological solutions can help us to rethink the Welfare State for the 21st Century,” she added. “The IDB wants to generate reliable evidence, through rigorous impact evaluations, to improve public policies in the region.”