Pension awareness and nation-wide auto-enrolment: the Italian experience

The paper discusses the Italian experience in developing its system of private, supplementary pensions, as a case study of the implementation of nation-wide auto-enrolment mechanisms; in the discussion, attention is devoted to pension awareness issues. Auto-enrolment (i.e. the automatic enrolment of workers in a private pension plan, with the individual allowed to opt out) can be seen as an effective means to increase participation in supplementary pension plans, as the process of raising pension awareness is slow, and mandatory participation may be distortive of individuals’ preferences and politically unfeasible. The paper summarizes the reasons for the limited success of auto-enrolment in Italy. Besides the importance of country-specific structural issues, the need for an overall, coherent, pension strategy is underlined, together with a consistent use of the different policy instruments available: not only in order to achieve the desired membership targets, but also as a prerequisite for effective awareness campaigns and education efforts. In addition, the importance is emphasized of a balance of responsibilities between the individual, the State, and intermediate bodies (such as social partners), with appropriate default options that should back-up the individual when he/she is unable or unwilling to choose; default options are important not only because they gently force individuals to “take” the right decisions, but also as complements to education and information efforts, because they convey information and advice in a simple and effective way.