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Pension Funds with Automatic Enrollment Schemes : Lessons for Emerging Economies

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  • Rudolph,Heinz P.

Abstract

Since the introduction of the KiwiSaver scheme in New Zealand in 2006, several countries have implemented, or are in the process of implementing, voluntary funded pension systems with automatic enrollment features. Since most of the literature has focused on countries with the common law tradition, including the United Kingdom and the United States, this note analyzes cases of countries with the civil code tradition, including Turkey, Poland, the Russian Federation, Chile, Brazil, and the Province of Quebec in Canada. This sample includes mostly emerging economies, with reforms at different stages, from those that have already been completed to those that are about to start discussions in their parliaments. Although they are not a substitute for necessary parametric reforms, automatic enrollment schemes offer the possibility of improvements in future retirement income for a significant part of the labor force. This note stresses that the paternalistic approach of automatic enrollment schemes imposes a great degree of responsibility on governments and requires careful consideration of the design of the system, including the industrial organization of the pension fund industry and default investment strategies. Sufficient time and resources for preparing communication and educational campaigns has played a key role in achieving high rates of participation.

Suggested Citation

  • Rudolph,Heinz P., 2019. "Pension Funds with Automatic Enrollment Schemes : Lessons for Emerging Economies," Policy Research Working Paper Series 8726, The World Bank.
  • Handle: RePEc:wbk:wbrwps:8726
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    File URL: http://documents.worldbank.org/curated/en/368081549376313709/pdf/WPS8726.pdf
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    Cited by:

    1. Fatih Kayhan & Mehmet Islamoglu, 2020. "A Comprehensive Assessment of Auto-Enrollment System as a Second Pillar of Pension System: The Case of Turkey," International Journal of Publication and Social Studies, Asian Economic and Social Society, vol. 5(2), pages 167-177, June.
    2. Halit Yanıkkaya & Zeynep Aktaş Koral & Sadettin Haluk Çitçi, 2023. "The Power of Financial Incentives versus the Power of Suggestion for Individual Pension: Are Financial Incentives or Automatic Enrollment Policies More Effective?," Sustainability, MDPI, vol. 15(4), pages 1-18, February.

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