The Impact of Automatic Enrolment on the Mental Health Gap in Pension Participation: Evidence from the UK

Karen Arulsamy and Liam Delaney

No 202004, Working Papers from Geary Institute, University College Dublin

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 3.2 percentage points less likely to participate in a workplace pension scheme while female private sector employees with poor mental health are 2.6 percentage points less likely to participate in a workplace pension scheme 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 completely removes the mental health gap in pension participation. By documenting the impact of automatic enrolment on the mental health gap in pension participation, we provide additional support for automatic enrolment policies which have already been shown to reduce gaps in pension participation among female and low income employees.

Keywords: Mental health; psychological distress; pensions; savings; automatic enrolment; financial security; longitudinal studies (search for similar items in EconPapers)
JEL-codes: D91 G41 J32 (search for similar items in EconPapers)
Pages: 64 pages
Date: 2020-06-05
New Economics Papers: this item is included in nep-age, nep-eur, nep-hea and nep-lma
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Journal Article: The impact of automatic enrolment on the mental health gap in pension participation: Evidence from the UK (2022)
Working Paper: 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:ucd:wpaper:202004

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