Auto-enrolment uses the power of inertia, or going with the flow, by removing the need for individuals to make an active decision. By automatically opting employees into a pension scheme they are nudged into pension saving at a determined default minimum rate. Auto-enrolment has achieved the success of high participation because it works with inertia. As a result of auto-enrolment saving into a workplace pension has become normalised. Research for the Department for Work and Pensions shows that 81% of eligible employees surveyed in 2019 agreed that saving into a workplace pension is the normal thing to do if you work for an employer. A bias towards the status quo has also ensured that opt-outs have remained low. Even when the statutory contribution levels increased, opt-outs were largely unaffected. Some have questioned whether the assumption that the majority of people will avoid making an active decision is too strong, suggesting it may be in the interests of some people, particularly those less financially secure, to opt-out.15 Participation rates of the least financially secure are the same as the most financially secure. While assuming that people will ‘go with the flow’ has been paramount to high pension participation and low opt-outs, it is also holding further saving back. This is because the power of inertia affects other decisions when it comes to pension savings, including whether to increase contributions or not. As such, auto-enrolment has not significantly engaged people in voluntary pension saving. A decade of auto-enrolment: has it helped or hindered saving psychology? 25
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