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New Voya behavioral finance research finds ‘pennies’ over ‘percents’ can help close retirement savings gaps

Study shows reframing retirement savings rates as “pennies per dollar” yields opportunity to boost retirement income for many working individuals

Voya Financial, Inc. (NYSE: VOYA), is sharing new findings from research conducted in association with the Voya Behavioral Finance Institute for Innovation. In a working paper titled “Reducing Savings Gaps Through Pennies Versus Percent Framing,”1 researchers from Carnegie Mellon University, Cornell University and UCLA published results from a new field study that involved more than 2,200 working individuals across dozens of organizations. The study examined an opportunity to help address today’s longstanding retirement savings gaps that exist across many demographic factors, including income, race and gender. Specifically, the results of the study found that a simple change in information architecture — or how the savings rate was framed — led to a significant boost in savings behavior among lower-income employees.

When enrolling in a workplace savings plan, most people today are tasked with choosing a retirement savings rate that is displayed as a percentage of their total paycheck. However, broader research suggests that a large number of individuals today struggle to calculate percentages,2 a challenge that becomes concerning when seeking to choose a rate that will help define one’s retirement savings. To help all workers better understand the benefits of saving for retirement, Voya’s study reviewed what would happen if instead of featuring a worker’s savings rate as a percentage, it was described in terms of pennies-per-dollar earned. For example, a 7% savings rate would be expressed as saving “7 pennies” for every dollar earned.

“While the industry has seen great success helping people save more for their retirement through ‘auto’ features like automatic enrollment and auto-escalation,3 we know that these tools are not feasible for all plans or individuals,” said Charlie Nelson, vice chairman and chief growth officer at Voya Financial. “By leveraging data and research such as that presented through Voya’s Behavioral Finance Institute for Innovation, we can help provide greater progress in reducing savings gaps — and through a relatively simple and cost-effective approach for employers.”

In the study, workers were randomly assigned to two different conditions: A “typical” retirement enrollment screen with savings shown as the percentage of one’s salary, or a “pennies” condition with savings shown as a specific number of pennies for every dollar earned. This change in information architecture had a significant impact on savings behavior, especially for lower-income workers with an average income of $32,000. Specifically, the study found that workers in the percentage condition had an average savings rate of 6.9%; whereas those in the pennies condition had an average savings rate of 8.0%. To put this in perspective, this savings rate is nearly as high as the savings rate of those participants in the highest income group (a mean salary of $115,000), who saved 8.5% of their salary.

According to Shlomo Benartzi, professor emeritus, UCLA Anderson School of Management, and a senior academic advisor to the Voya Behavioral Finance Institute for Innovation, behavioral economics has taught us that the most powerful tool to improve retirement outcomes for all employees is to periodically re-enroll them with appropriate defaults. However, Benartzi notes that we also need to expand the behavioral economics toolkit to address situations in which auto-features are not feasible.

“In this study, we showed how reframing saving decisions as pennies-per-dollar earned, instead of the typical percent of pay, can have a meaningful impact on future retirement savings,” added Professor Benartzi. “As a result, this behavioral intervention has the potential to boost retirement income by almost 20% if implemented throughout the entire accumulation phase of one’s career. More importantly, it reduces longstanding societal gaps in savings behavior, making it easier for lower-income employees to better prepare for retirement. Over time, helping people save just a few pennies more can add up to thousands of dollars of retirement security.”

Consider “pennies” beyond the retirement plan

While the findings of this study focused on retirement savings, employers have an opportunity to consider the “pennies” framing for other possible savings accounts, such as emergency savings, health savings accounts and employee benefits. For instance, an emergency fund could be built through a combination of pennies framing and gradual escalation. Workers could be asked to save one penny out of every dollar earned for emergencies this year, two pennies next year and so on until they have a viable reserve fund. Another approach could make it easier for workers to save a dime for every dollar they earn, with an automatic allocation of those funds to various accounts. For instance, employers could ask a participant to allocate six pennies for retirement, two pennies for emergencies and two more pennies for health savings.

“At Voya, and through our behavioral finance research, we want to ensure all individuals are given the opportunity to achieve financial security,” said Rick Mason, director of the Voya Behavioral Finance Institute for Innovation, and senior research fellow, Carnegie Mellon University. “We encourage employers and advisors to explore the potential benefits that can come with a deeper understanding of behavioral architecture and the long-term impact it can have to addressing the many savings gaps that exist today.”

Since its inception in 2016, Voya’s Behavioral Finance Institute for Innovation has enhanced the digital experiences of more than 99% of Voya’s retirement plans and nearly 5,500,000 eligible retirement participants.4 By merging behavioral science with the speed and scale of the digital world, Voya’s Behavioral Finance Institute for Innovation continues to create large-scale solutions designed to help improve individual retirement outcomes. For more information and to view the findings from the current working paper or past studies, visit

As an industry leader focused on the delivery of health, wealth and investment solutions to and through the workplace, Voya Financial is committed to delivering on its mission to make a secure financial future possible for all Americans — one person, one family, one institution at a time.

1. Shu, Stephen, Hal Hershfield, Richard Mason, and Shlomo Benartzi. “Reducing savings gaps through pennies versus percent framing.” SSRN Working Paper (2022)

2. Lipkus, Isaac M., Greg Samsa, and Barbara K. Rimer. “General performance on a numeracy scale among highly educated samples.” Medical Decision Making 21.1 (2001): 37-44.

3. Thaler, Richard H., and Shlomo Benartzi. “Save more tomorrow™: Using behavioral economics to increase employee saving.” Journal of Political Economy 112.S1 (2004): S164-S187.

4. Includes Voya Enroll, Participant web screen changes and personalized video distribution.

Dr. Benartzi is a paid consultant to Voya Services Company, a wholly-owned subsidiary of Voya Financial.

About Voya Financial®

Voya Financial, Inc. (NYSE: VOYA), is a leading health, wealth and investment company that provides products, solutions and technologies that help Americans become well planned, well invested and well protected. Serving the needs of 14.3 million individual, workplace and institutional clients, Voya is a Fortune 500 company that had $4.2 billion in revenue in 2021 and $739 billion in total assets under management and administration as of Dec. 31, 2021. Certified as a “Great Place to Work” by the Great Place to Work® Institute, Voya is purpose-driven and is equally committed to conducting business in a way that is socially, environmentally, economically and ethically responsible. Voya has earned recognition as: one of the World’s Most Ethical Companies® by the Ethisphere Institute; a member of the Bloomberg Gender-Equality Index; and a “Best Place to Work for Disability Inclusion” on the Disability Equality Index. For more information, visit Follow Voya Financial on Facebook, LinkedIn and Twitter @Voya.



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