Do Matching Contributions incentivize informal workers to participate in retirement saving plans? A Randomized Evaluation in Peru

The proposed intervention is focused on workers of small firms not enrolled in the pension system. The scheme of the intervention's protocol is: (i) All workers are visited by sales agents who bring information about the pension system and future saving benefits. (ii) Workers decide if they want to participate and to become affiliated with the Pension Fund. (iii) Depending on the treatment group, workers receive a matching defined contribution (MDC) for every monthly contribution they had done, controls do not receive any matching (iv). During the six months of treatment, all workers receive WhatsApp reminders (treated and control groups).

2018-10-30

2020-01-30

1) The enrollment rate of workers to the Pension Fund.
2) The contribution rate of new affiliates to thePension Fund.

There are two principal outcomes of interest:
1) The enrollment rate of workers to the Pension Fund: This outcome is directly obtained when a worker decides to affiliate to his Pension Fund; we confirm this information when the Pension Fund verifies worker affiliation in his system.
2) The contribution rate of new affiliates to the Pension Fund: The Pension Fund strictly provides this variable; we are informed about workers who have contributed and how much they had. This rate varies with the new flow of affiliates for each month.
An additional advantage of our study is that we can verify quickly the outcomes and provide a short-term analysis.

Each firm is randomly assigned to three groups, two treatment groups, and one control group. All workers from a firm inherit the firm's random treatment. The first treatment group receives information on pension savings and a 100% MDC (subject to a maximum amount) for six months. The second treatment group receives information and a 50% MDC (subject to a maximum amount) for the same period of time. The control group does not get any MDC, but they receive information about how important is to save for retirement.

In detail, the experimental design follows:
Treatment 1:
The intervention process is as follows: (i) workers from the treatment 1 group are visited by sales agents to receive information about the pensions system, the importance of retirement savings and about the 100% MDC program to which they were assigned to. (ii) The sales personnel assist workers who decide to participate and become affiliated. (iii) Every month, workers can contribute and save for their retirement through financial collector units. For every contribution they do, they receive the 100% MDC for six months, subject to a maximum matching of 41.5 USD (140 soles). For instance, if a worker contributes 32 USD (108 soles), which is the minimum amount according to regulation, he will receive another 32 USD in his savings account for that month. (iv) workers from this group receive WhatsApp reminders to contribute and confirmation messages for every contribution they did including how much they won by saving for their future.
Treatment 2:
The intervention process follows: (i) workers from the treatment 2 group are visited by sales agents to receive information about the pensions system, the importance of retirement savings and about the 50% MDC that they receive for every contribution. (ii) workers can choose whether to participate or not; sales personnel can help them in the affiliation process anytime. (iii) every month, workers can contribute and save for their retirement through financial collector units. For every contribution they do, they receive the 50% MDC for six months, subject to a maximum matching of 41.5 USD (140 soles). For instance, if a worker contributes 32 USD (108 soles), which is the minimum amount according to regulation, he will receive 12 USD (54 soles) in his savings account for that month. (iv) workers from this group will receive WhatsApp reminders to contribute and confirmation messages for every contribution they did including how much they won because of the 50% matching.
Control:
The intervention procedure is as follows: (i) workers from the control group are visited by sales agents and receive detailed information about the pension system, and the importance of future savings. (ii) workers can decide whether to enroll or to not into the corresponding Pension Fund and sales personnel can affiliate new workers from the control group. (iii) workers can contribute any month they want to, but they are not going to receive any matching contribution. (v) workers from the control group receive WhatsApp reminders to contribute and information about the importance of keeping savings.
Since the only difference between treatment groups and the control group is the MDC, we can respond to the question about the impact of the MDC on enrollment and contribution by comparing the results between control and treated groups.

Stratified Randomization

Firm

Yes

2,181 small firms

3,969 workers

727 firms

We expect the intervention will get a Minimum Detectable Effect of 0.03612 for contribution rate. In particular, this MDE is associated with an overall percentage variance of 14% between treatment and control groups. The following assumptions are up to date based on our baseline collected in the preliminary pilot from May– June 2018. We are using 1.82 observations per cluster, an inter-cluster correlation of 0.17, and a standard deviation of 0.227. Finally, for these calculations, we assume a significance level of 0.05 and a power of 0.8.