With innovation on the government's agenda and across the financial services sector, is AI set to transform how pension schemes are run?
The regulatory framework for AI is still at early stages, with the UK's 'pro-innovation' policy proposals published in March 2023. As with the metaverse, it is difficult to predict all of the potential applications of AI. What we do know is that AI is predicted to transform financial services, and the pensions industry is no exception.
For some schemes, AI may already be in use, or be in development, to help streamline everyday tasks. Examples here include:
- Administration: managing the member data that pension schemes need to operate effectively, spotting gaps and helping to fix them
- Member communications: responding to simple member queries, and designing communications that are accessible and engaging
- Investment: analysing data, including ESG data, to aid decision-making and reporting
AI could particularly help smaller schemes access cost-effective ways to improve the services they offer to members, like retirement modelling tools, or helping identify risks of pension scams or fraud.
For now, at least, AI will not replace pension scheme trustees and managers, who remain legally responsible for running the scheme. The challenge for pension schemes and their advisers is to make sure AI is being used effectively. This means understanding its limitations, ensuring members' information is appropriately protected, and keeping pace as this technology evolves.
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