The impact of automatic enrolment on the mental health gap in pension participation: evidence from the UK

Karen Arulsamy and Liam Delaney

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: A large body of evidence shows that individuals with poor mental health have lower income over the lifespan but a dearth of evidence exists on how poor mental health affects savings behaviour. In this paper, we provide novel evidence of a mental health gap in pension participation in the UK using nationally representative longitudinal data from Understanding Society (UKHLS). Beginning in 2012, the UK government introduced automatic enrolment enabling us to assess the impact of one of the largest pension policy reforms in the world on this mental health gap. We measure mental health using the General Health Questionnaire (GHQ-12) which is a commonly used tool for measuring psychological distress. Prior to automatic enrolment, we find that male private sector employees with poor mental health are 3.7 percentage points less likely to participate in a workplace pension scheme while female private sector employees with poor mental health are 2.9 percentage points less likely to participate after controlling for key observables including age, education, race, marital status, number of children, occupation type, industry type, presence of a physical health condition and cognitive ability. The implementation of automatic enrolment removes the mental health gap in pension participation, equalising the pension participation rates of individuals with and without poor mental health in the private sector.

Keywords: automatic enrolment; financial security; longitudinal studies; mental health; pensions; psychological distress; savings (search for similar items in EconPapers)
JEL-codes: D91 J32 (search for similar items in EconPapers)
Pages: 15 pages
Date: 2022-12-01
New Economics Papers: this item is included in nep-age and nep-eur
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Citations: View citations in EconPapers (3)

Published in Journal of Health Economics, 1, December, 2022, 86. ISSN: 0167-6296

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http://eprints.lse.ac.uk/117274/ Open access version. (application/pdf)

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Journal Article: The impact of automatic enrolment on the mental health gap in pension participation: Evidence from the UK (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:117274

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