Artificial intelligence (AI) could act as a “personalised agent” for pension savers at retirement, helping individuals navigate complex financial decisions and improve outcomes, according to the founder of a pension infrastructure platform.

Speaking to Pensions Age, Freedom founder, David Brown, said the technology has the potential to transform the decumulation phase by delivering tailored, real-time guidance based on an individual’s full financial picture.

“I think AI could play a tremendous role because it has the ability to drop to an individual level.

“That’s something most enterprise systems just couldn’t do before - they couldn’t get down to the individual saver. Whereas AI potentially can.”

Brown explained that AI could operate as a dedicated agent for each saver, drawing on open finance and open banking data to assess income, savings and spending, and provide guidance at the point of decision-making.

This could be triggered, for example, when a saver looks to access their pension, allowing the system to assess the purpose of the withdrawal and its wider financial implications.

“It’s like saying you want to access money and being asked what it’s for,” he continued.

“Once the system understands that, it can validate the decision against your personal profile and let you know if it’s a good idea.”

Brown highlighted the potential for AI to improve decision-making in tax and income areas, where poor choices can have significant long-term consequences.

“For example, someone might think they want to withdraw £100,000 from their pension, but that could push them into a much higher tax bracket,” he explained.

“AI could flag that and suggest alternatives, such as financing a purchase instead, if that works out more efficiently.”

He also pointed to the role AI could play in preventing unintended financial harm, such as breaching eligibility thresholds for means-tested benefits.

“Someone might want to withdraw £10,000, but if they’re receiving benefits, that could impact their entitlement,” Brown added.

“AI could identify that and explain the implications before the decision is made.”

However, Brown stressed that the use of AI must remain optional, with savers retaining full control over their decisions.

“Some people will be comfortable being guided by technology, others will want to make decisions themselves.

“When it comes to their money, people should have the choice in how they manage it.”

Looking ahead, Brown suggested that AI could play a continuous role throughout retirement, rather than being limited to a single interaction at the point of accessing savings.

“Personally, I believe someone should have an AI agent for their entire retirement life, one that builds up a full understanding of their behaviours and circumstances,” he argued.

“But that raises questions around portability - if you switch provider, what happens to that AI agent and the knowledge it holds? It’s too early to call how that will work.”

In light of the Society of Pension Professionals (SPP) recent findings that 100 per cent of the UK pensions sector is now using artificial intelligence (AI) in services, Brown warned that its current use may not yet be focused on the areas where it can deliver the greatest impact.

“It depends where you’re using it,” he stressed.

“In many cases, it’s being applied to lower-cost areas like customer service.

“But actually, it has just as much potential - if not more - in higher-impact areas of the business. That’s where it could really move the needle.”

Brown also emphasised that AI should be seen as an enabler rather than a replacement for existing pension infrastructure, particularly given the sector's regulatory and operational requirements.

“We’re still operating in a regulated environment with real money, so that infrastructure and oversight will always be needed,” he added.

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