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What happens to workplace pension saving when employers are obliged to enrol employees automatically?

Author

Listed:
  • Jonathan Cribb

    (Institute for Fiscal Studies
    University College London)

  • Carl Emmerson

    (Institute for Fiscal Studies)

Abstract

We examine the effect of obliging employers to enrol employees automatically into a workplace pension scheme. We exploit the phased roll-out of automatic enrolment, by employer size, in the first country to do so nationwide (the UK), to estimate its effect on pension saving among private sector employees. We find substantial increases in pension participation and a rise in pension saving. Surprisingly, many newly enrolled employees received an employer contribution substantially above the (very low) minimum default level. Automatic enrolment also caused the pension participation of those employees who were not obliged to be automatically enrolled to more than double.

Suggested Citation

  • Jonathan Cribb & Carl Emmerson, 2020. "What happens to workplace pension saving when employers are obliged to enrol employees automatically?," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 27(3), pages 664-693, June.
    • Handle: RePEc:kap:itaxpf:v:27:y:2020:i:3:d:10.1007_s10797-019-09565-6
    DOI: 10.1007/s10797-019-09565-6
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    References listed on IDEAS

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    Cited by:

    1. Rowena Crawford, 2020. "How does pension saving change when individuals complete repayment of their mortgage?," IFS Working Papers W20/39, Institute for Fiscal Studies.
    2. Sulka, Tomasz, 2022. "Planning and saving for retirement," DICE Discussion Papers 384, Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    3. John Beshears & Ruofei Guo & David Laibson & Brigitte C. Madrian & James J. Choi, 2023. "Automatic Enrollment with a 12% Default Contribution Rate," NBER Working Papers 31601, National Bureau of Economic Research, Inc.
    4. Rowena Crawford & Polly Simpson, 2020. "The impact of house prices on pension saving in early adulthood," IFS Working Papers W20/38, Institute for Fiscal Studies.
    5. Rachel Scarfe & Daniel Schaefer & Thomas Sulka, 2024. "The Incidence of Workplace Pensions: Evidence from the UK's Automatic Enrollment Mandate," Economics working papers 2024-02, Department of Economics, Johannes Kepler University Linz, Austria.
    6. Marina Gómez-García & Ernesto Villanueva, 2022. "The effect of workplace pension schemes on households' private savings," Economic Bulletin, Banco de España, issue 2/2022.
    7. Laurence O'Brien, 2023. "The effect of tax incentives on private pension saving," IFS Working Papers W23/10, Institute for Fiscal Studies.

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    More about this item

    Keywords

    Automatic enrolment; Private pensions; Non-wage benefits;
    All these keywords.

    JEL classification:

    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy

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