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

Author

Listed:
  • Rachel Scarfe

    (School of Economics, University of Edinburgh)

  • Daniel Schaefer

    (Department of Economics, Johannes Kepler University Linz)

  • Tomasz Sulka

    (Duesseldorf Institute for Competition Economics, Univerity of Duesseldorf)

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.

Suggested Citation

  • Rachel Scarfe & Daniel Schaefer & Tomasz Sulka, 2023. "The Incidence of Workplace Pensions: Evidence from the UK's Automatic Enrollment Mandate," Edinburgh School of Economics Discussion Paper Series 313, Edinburgh School of Economics, University of Edinburgh.
    • Handle: RePEc:edn:esedps:313
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    References listed on IDEAS

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    More about this item

    Keywords

    Mandated benefits; Staggered difference-in-differences; Employer-sponsored retirement savings; Incentive design;
    All these keywords.

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy

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