Session on Well-being and mental health: material conditions, 8 December 2021, more information at www.oecd.org/wise/well-being-and-mental-health.htm

1. The impact of automatic enrolment on the
mental health gap in pension
participation: Evidence from the UK
Karen Arulsamy
University College Dublin
(with Liam Delaney, London School of Economics)
OECD Well-Being and Mental Health Conference 2021

2. The potential interaction of mental health and retirement savings
Poor mental health
Lower educational
attainment
Lower earnings
Lower household wealth
Lower retirement savings
Govt. pensions
Workplace pension plans
Individual savings accounts
Higher unemployment

3. The link between mental health & workplace pension participation
Individuals may be more likely to work in jobs that do not provide access to plans
• Poor mental health can lead to lower educational attainment -> lower income and
poorer quality jobs -> lower access to a plan
The symptoms of mental health issues may make it harder to navigate decisions
on pensions
• Individuals may face greater cognitive burden
• Individuals may focus more on managing day to day tasks
1
2
Behavioural economics => Cognitive burden and present bias are key behavioural barriers
to pension participation

4. Pensions automatic enrolment in the UK
Employees who earn at least £10,000
per year were automatically enrolled
into their employer’s workplace
pension plan
Employees could opt out
Employees who were not
automatically enrolled could opt in
Public vs. Private Sector employer pension participation 1997-2015
More than 10 million workers had been
auto-enrolled with an opt out rate of
10 percent.
Reduced gaps in pension participation
among women & low income workers

5. Overview of study
• Nationally representative panel dataset : Understanding Society (2009-2017)
• Measure mental health using the GHQ-12 : 3 and above indicates psychological distress
• Measure mental health in Wave 1 (2009-2010) of the dataset ie. baseline mental health
• Compare the workplace pension participation before and after automatic enrolment
• Account for key variables such as age, education, race, marital status, number of children, occupation type,
industry type, presence of a physical health condition and cognitive ability.
What is the impact of automatic enrolment on the workplace pension participation
rates of individuals with good vs. poor mental health?

6. Auto-enrolment closes the mental health gap in pension
participation
Pension participation rates by baseline psychological distress among
private sector employees
- 5.4 ppts
p < 0.001 No significant difference
Before After
Prior to auto-enrolment, employees
with poor mental health also
-> less likely to report other types of
savings
-> less likely to report working for an
employer who provided access to a
plan