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

Author

Listed:
  • Karen Arulsamy

    (School of Economics & Geary Institute for Public Policy, University College Dublin)

  • Liam Delaney

    (School of Economics & Geary Institute for Public Policy, 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.

Suggested Citation

  • Karen Arulsamy & Liam Delaney, 2020. "The Impact of Automatic Enrolment on the Mental Health Gap in Pension Participation: Evidence from the UK," Working Papers 202004, Geary Institute, University College Dublin.
    • Handle: RePEc:ucd:wpaper:202004
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    References listed on IDEAS

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    Cited by:

    1. Michaela Benzeval & Edith Aguirre & Meena Kumari, 2023. "Understanding Society: health, biomarker and genetic data," Fiscal Studies, John Wiley & Sons, vol. 44(4), pages 399-415, December.
    2. Karen Arulsamy, 2022. "The impact of adolescent psychological distress on access and participation in employer sponsored pension plans in the US," Working Papers 202201, Geary Institute, University College Dublin.
    3. Angelucci, Manuela & Bennett, Daniel M, 2022. "Depression, Pharmacotherapy, and the Demand for a Novel Health Product," IZA Discussion Papers 15832, Institute of Labor Economics (IZA).
    4. Lucie Martin & Liam Delaney & Orla Doyle, 2022. "Everyday Administrative Burdens and Inequality," Working Papers 202202, Geary Institute, University College Dublin.

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    More about this item

    Keywords

    Mental health; psychological distress; pensions; savings; automatic enrolment; financial security; longitudinal studies;
    All these keywords.

    JEL classification:

    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets

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