| Abstract: |
Default settings strongly increase pension enrollment, especially when savings
incentives are high and choices are complex. We show that the effect is weaker
when incentives are low, options are simple, and opting out is easy. We study
the nationwide introduction of auto-enrollment for low-income employees in
Germany's public pay-as-you-go pension system. We find that automatic
enrollment raises participation by 23 percentage points, though most
individuals actively opt out. Linking administrative and survey data shows
that the default effect is stronger when enrollment incentives are higher and
among individuals who lack knowledge of their enrollment status. |