Trust and the behavioral economics of automatic enrollment in pensions: a comparison of the UK and Poland

ABSTRACT Experience in the UK with auto enrolling workers in pensions indicates that once enrolled, most workers stay enrolled, suggesting that auto enrollment may be a desirable policy for other countries. However, the experience with auto enrollment is much different in Poland. This paper examines the argument that inertia is not a strong force when workers distrust in the security of future pension benefits. We present a simple conceptual framework where trust affects the subjective probability distribution of workers relating to future pension benefits. We investigate how this framework might explain the high opt-out rate in Poland.