What Can We Learn About Automatic Enrollment Into Pensions From Small Employers?

Jonathan Cribb and Carl Emmerson

National Tax Journal, 2021, vol. 74, issue 2, 377 - 404

Abstract: Small employers employ significant fractions of the workforce, but their employees typically have very low pension plan participation rates and so are much more likely to be affected by government polices requiring automatic enrollment. We examine the first nationwide policy in the United Kingdom obliging small employers to enroll employees automatically into a pension. Exploiting pseudorandom variation in its introduction, we find automatic enrollment increased pension participation by 44 percentage points, reaching 70 percent — still substantially lower than the 90 percent rate among those working for the largest employers. We discuss evidence for the potential mechanisms that drive this lower participation rate.

Date: 2021
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