Pensions and Retirement Training Course on Behavioral Biases in Retirement Decisions

Module 1: Introduction to Behavioral Finance and Decision-Making
Overview of behavioral finance: principles, history, and application
Differences between traditional finance assumptions and behavioral insights
Key psychological concepts: bounded rationality, heuristics, and mental accounting
Emotional vs. cognitive decision-making processes
Real-world examples of irrational retirement decisions
Interactive exercise: analyzing decision-making patterns in retirement scenarios

Module 2: Common Behavioral Biases in Retirement Planning
Loss aversion: preference for avoiding losses over acquiring gains
Overconfidence and optimism bias in investment and retirement planning
Present bias and procrastination affecting contribution and saving decisions
Anchoring, framing effects, and status quo bias in benefit selection
Herding behavior and susceptibility to market trends
Workshop: identifying and categorizing biases in hypothetical retiree scenarios

Module 3: Behavioral Impacts on Savings, Investment, and Withdrawal Decisions
Influence of biases on contribution rates and asset allocation choices
Suboptimal portfolio diversification due to cognitive shortcuts
Impact of mental accounting on spending and withdrawal patterns
Behavioral drivers of early or late retirement decisions
Case study: analyzing a retiree’s suboptimal investment decisions
Exercise: designing interventions to encourage disciplined savings and withdrawals

Module 4: Mitigating Biases and Improving Retirement Outcomes
Commitment devices, nudges, and default options to counteract biases
Automatic enrollment, auto-escalation, and managed accounts
Cognitive interventions: framing, goal-setting, and scenario planning
Emotional interventions: stress management, peer support, and education
Designing retirement plans resilient to behavioral pitfalls
Workshop: creating a comprehensive framework to reduce bias impact in retirement planning

Module 5: Applying Behavioral Insights for Advisors, Trustees, and Policy Makers
Communicating effectively with members to reduce bias-induced errors
Behavioral plan design: defaults, choice architecture, and incentive structures
Monitoring and evaluating interventions to improve decision-making outcomes
Case study: implementing behavioral strategies in a pension plan
Capstone project: designing a member-focused, behaviorally-informed retirement strategy
Discussion: emerging trends in behavioral finance and implications for pensions