AI in Pensions: An opportunity not to be missed

In recent years, few technologies have generated more excitement, or anxiety, than artificial intelligence (‘AI’).

AI adoption is already transforming the financial services industry, and recent research has claimed that AI could boost the UK economy by £550 billion over the next decade. With growth firmly on the Chancellor’s agenda, incorporating AI into our industries has the potential to help firms become more agile, more efficient, and more responsive to customer needs.

Trust in the potential

Valued at roughly £3 trillion and representing a huge potential for investment in the UK economy, as well as the later-life livelihoods of millions, the potential of AI in pensions should not be ignored. Enhancing the way schemes are governed and administered could have far-reaching implications, for financial wellbeing and economic resilience, impacting not just individual savers, but the wider UK economy.

Central to the function of the UK pensions industry are trustees, already facing an increasingly complex set of challenges, including how to maintain robust governance, support members in making better decisions, and navigate a shifting regulatory landscape. The growth in the professional trustee market has established that there is a need to professionalise and regulate an industry that has changed beyond recognition over recent years; add technological disruption to the mix, and we must tread even more carefully.

At IGG, we believe the responsible use of AI has the potential to materially enhance the quality of trusteeship, not replace it. Used well, AI can strengthen how we govern pension schemes, analyse and interrogate data, communicate with members, and manage risk. Still, no conversation about AI is complete without addressing the risks, and they are real.

Managing risk and reward

The rate at which AI is evolving can feel unrelenting at times, with people and policies struggling to keep up. While there are real benefits offered by AI, it is crucial that we balance keeping pace with technological developments, with being alive to the risks and regulatory grey areas that come with it.

The threat of scams, data misuse, and savers turning to unregulated AI tools for financial advice is growing. That is why human oversight must remain central to how AI is deployed in pensions governance.

Trustees have fiduciary obligations to act in the interests of their members, and while AI can provide powerful insights, it is no replacement for professional judgement. Just as the introduction of professional trustees has strengthened scheme governance over the past decade, AI can support more informed, effective decision-making. It can help trustees ask better questions, spot emerging risks sooner, and maintain consistency in their governance. In short, AI can sharpen the tools we already use.

An AI professional trustee?

Professional trustees are uniquely placed to help schemes and the pensions industry more broadly navigate AI adoption. Independent and experienced in managing complex governance systems, as well focused on long-term outcomes for members, the role of the professional trustee is to challenge, to interpret risk, and ensure that any tools we adopt strengthen, rather than dilute these core responsibilities.

Professional trustee firms are already putting this into practise, with proprietary platforms driven by AI, enhancing the role of the trustee and improving member outcomes. Tools such as IGGiQ are designed to give trustees better access to real-time data and scenario modelling, meaning that trustees can respond more quickly to market events and compare investment portfolios against benchmarks.

Professional trustees have a responsibility to set a gold standard for appropriate use of AI in pensions trusteeship. But this can’t just be left to individual firms. The sector needs structure, clarity, and sector-wide ambition.

The Government has rightly taken an active interest in pensions reform in recent months; the same energy must now be applied to setting out its intent on AI. In the short term, this could include transparency requirements and best practice guidance. In the longer term, we need a flexible regulatory framework that can evolve with the technology. If we are to truly harness AI’s potential in pensions, industry and Government must work together to set standards that protect members while supporting innovation. That is how we will build a more resilient, forward-looking pensions system, one that keeps human judgement at its core, but with technology at its disposal.