The Incidence of Workplace Pensions: Evidence from the UK's Automatic Enrollment Mandate

Rachel Scarfe, Daniel Schaefer and Tomasz Sulka
Additional contact information
Daniel Schaefer: Department of Economics, Johannes Kepler University Linz
Tomasz Sulka: Duesseldorf Institute for Competition Economics, Univerity of Duesseldorf
Authors registered in the RePEc Author Service: Daniel Schäfer

No 313, Edinburgh School of Economics Discussion Paper Series from Edinburgh School of Economics, University of Edinburgh

Abstract: Many countries have recently introduced automatic enrollment programs for workplace pensions, requiring employers to pay contributions. We examine who bears the costs of such mandated pension programs, exploiting the quasi-experimental rollout of automatic enrollment in the UK. We provide two novel findings: First, total compensation (the sum of basic pay, extra pay, and employer pension contribution) increases, driven by employer contributions, while the amount of extra pay decreases. We do not find evidence that the policy affects working hours. Second, these effects differ by employer size, with extra pay declining to such an extent in large employers that total compensation does not increase. Our findings provide the first evidence that large employers shift the cost of automatic enrollment onto employees, adversely impacting take-home pay.

Keywords: Mandated benefits; Staggered difference-in-differences; Employer-sponsored retirement savings; Incentive design (search for similar items in EconPapers)
JEL-codes: D21 H22 J32 J38 (search for similar items in EconPapers)
Pages: 51 pages
Date: 2023-09
New Economics Papers: this item is included in nep-age and nep-hrm
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Related works:
Working Paper: The Incidence of Workplace Pensions: Evidence from the UK's Automatic Enrollment Mandate (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:edn:esedps:313

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