The Retirement Savings Laboratory will carry out pilot programs to encourage more workers in the region to save for their old age.
The Inter-American Development Bank (IDB) today presented the Retirement Savings Laboratory, a project that seeks to increase the number of people saving for retirement in Latin America and the Caribbean.
Most workers in Latin America and the Caribbean (around 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 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.
In order to encourage more workers in the region to save for their retirement, the IDB 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 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.
According to Carmen Pagés, chief of the Labor Market Division of the IDB, “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. The use of behavioral economics and technological solutions can help us to rethink the Welfare State for the 21st Century.” Pagés also highlights the importance of this project, with which “the IDB wants to generate reliable evidence, through rigorous impact evaluations, to improve public policies in the region.”
About the IDB
The Inter-American Development Bank is a leading source of long-term financing for economic, social and institutional projects in Latin America and the Caribbean. Besides loans, grants and guarantees, the IDB conducts cutting-edge research to offer innovative and sustainable solutions to our region’s most pressing challenges. Founded in 1959 to help accelerate progress in its developing member countries, the IDB continues to work every day to improve lives.