What happens when employers are obliged to nudge? Automatic enrolment and pension saving in the UK

Document type
Cribb, Jonathan; Emmerson, Carl
Institute for Fiscal Studies
Date of publication
17 November 2016
IFS Working Paper; W16/19
Poverty Alleviation Welfare Benefits and Financial Inclusion, Employment, Older Adults
Social welfare
Material type

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This paper studies the first nationwide introduction of automatic enrolment, in which employers in the United Kingdom are obliged to enrol employees into a workplace pension scheme, which employees can then choose to leave if they wish.

As a result of automatic enrolment, participation in workplace pensions among eligible private sector workers is estimated to have increased by 37 percentage points, and workplace pension membership reached 88% amongst those affected by April 2015.

Automatic enrolment significantly increased the average pension contribution rate, in part because some newly enrolled employees received an employer contribution well above the minimum mandated by the government.

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