Arbeitspapier
The distributional impact of pension auto-enrolment
The Irish government plan to introduce pension auto-enrolment in the coming years. Subject to certain age and earnings thresholds, employees not covered by a supplementary pension will be auto enrolled into a retirement savings scheme. It is anticipated the initial employee contribution rate will be 1.5% rising to 6% after a number of years. While individuals can opt out of the scheme, this can only be done after an initial 6-month period. Those opting out of the scheme can receive a refund of their contributions after this 6-month period, however affordability issues may arise for some during these initial 6 months. In this paper we examine the distributional, poverty and inequality impacts of pension autoenrolment. We find that the largest negative impact will be felt in quintile 4, followed by quintile 3 - i.e. the middle income ranges. The bottom two income quintiles will see the smallest fall in disposable income. These results are driven by the fact that only 1% of family units in the lowest quintile and 7% in the second quintile will actually be affected by auto-enrolment due to lower employment incomes in these quintiles. There is no notable differing impact by gender, if anything women in lower income deciles face smaller losses - either because they do not work, do not earn enough to be auto-enrolled or are more likely to be covered already by an occupational pension due to their higher concentration in the public sector. There will be little impact on the at-risk-of-poverty rate. This is explained by the distributional impact findings whereby the largest negative impacts on disposable income were found for the upper income quintiles, for whom the 1.5% contribution rate examined is not sufficient to push them below the poverty line. These findings also hold for a higher 6% contribution rate.
- Language
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Englisch
- Bibliographic citation
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Series: ESRI Working Paper ; No. 707
- Classification
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Wirtschaft
- Event
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Geistige Schöpfung
- (who)
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Keane, Claire
O'Malley, Seamus
Tuda, Dora
- Event
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Veröffentlichung
- (who)
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The Economic and Social Research Institute (ESRI)
- (where)
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Dublin
- (when)
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2021
- Handle
- Last update
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10.03.2025, 11:41 AM CET
Data provider
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Keane, Claire
- O'Malley, Seamus
- Tuda, Dora
- The Economic and Social Research Institute (ESRI)
Time of origin
- 2021