Pension schemes should adopt artificial intelligence (AI) responsibly as pension savers increasingly use unregulated AI tools to interpret financial information and make decisions about retirement, according to a report from Pensions UK.

The report, 2030 Ready: a Pathway to AI Adoption, explored the rapid growth of AI and what these developments mean for the industry, including for pension savers and schemes already using the technology.

Pension schemes are increasingly using AI across administration, investment, member engagement, fraud detection and data remediation, creating opportunities to make pensions more accessible, personalised and efficient.

However, the report highlighted a range of risks posed by AI that trustees and schemes need to manage, including inaccurate AI-generated outputs, cyber security threats, data privacy concerns, intellectual property issues, labour market disruption and the environmental impact of AI infrastructure.

The report warned that unless schemes adopt the technology more quickly, savers could turn to unregulated or unsafe tools, exposing them to inaccurate guidance, data misuse, scams and poor financial decisions.

Pensions UK called for the sector to adopt AI proactively, with strong governance, clear accountability and appropriate human oversight of decision-making.

The report also said government and employers should monitor AI's impact on workers, particularly older workers and under-pensioned groups who may be more vulnerable to job displacement or changes in working patterns.

“The AI revolution is well under way, and already impacting the pensions industry in multiple ways,” said Pensions UK executive director of policy and advocacy, Zoe Alexander.

She explained that while AI has the potential to support schemes there are also risks, and that savers are already turning to publicly available AI tools for help with complex financial questions, including retirement planning.

“If these tools provide inaccurate information, misuse personal data or blur the line between guidance and advice, the consequences could be serious,” she warned.

“That is why trustees, schemes, government, regulators and the wider industry need to work together now. AI should be adopted in a way that is trusted, well governed and focused on better outcomes for savers.”

Pensions UK said it is working with The Pensions Regulator's pensions data and digital industry working group to develop an AI guidance tool for trustees and schemes.

The resource will be updated to reflect developments in the technology, regulation and industry practice, and will provide guidance on the use of AI in pensions.

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