Essays on pensions and saving in the UK

Abstract

This thesis considers different issues about pensions and saving in the UK. The first two chapters study aspects of the effects of the automatic enrolment policy, introduced in 2012. The policy obliged firms to enrol eligible employees into a pension by default. Auto-enrolment, which was meant to increase pension participation following concerns of under-saving for retirement, simultaneously raised labour costs. The first chapter explores the degree to which firms pass the cost of the policy onto employees. Using data from the Financial Analysis Made Easy, we find that companies most affected by the policy reduce wages and salaries paid to workers. Hence workers receive lower present income, due to both lower earnings growth and salary contributions to an illiquid pension. The second chapter looks at who chooses to opt out of auto-enrolment. In contrast to previous studies that suggest a uniform level of participation after auto-enrolment, we show using data from the Wealth and Assets Survey that individual characteristics are significantly correlated with opting out, including having financial difficulties, holding a personal pension and being younger. The third chapter considers gender differences in equity holdings. It has been recognised that a gender gap in equity participation may have implications for male and female wealth and preparedness for retirement. However, consideration of the gender gap is less simple in couples who may hold assets jointly. We show first that partnership status affects women’s equity holdings and second that there is an asymmetry in the effect of male and female characteristics, namely, financial risk preference and degree education, on household equity holdings. Even though women in couples may benefit from higher equity participation, this has only a small effect on their levels of retirement wealth. The gender gap in financial wealth stays large, mainly due to unequal earnings during working years.

Date of Award	20 Jun 2023
Original language	English
Awarding Institution	University of Bristol
Supervisor	Sarah L Smith (Supervisor) & Edmund Cannon (Supervisor)