The Pensions Regulator (TPR) has published guidance outlining its expectations for pension trustees on identifying and managing ‘hidden’ AI-related investment exposure.

It noted that AI was becoming increasingly influential across global markets, with private investment in the technology rising by 127.5 per cent year-on-year in 2025.

With AI becoming more embedded across sectors, this concentration of investment was bringing new risks and opportunities for pension schemes.

Even diversified portfolios could have hidden exposure to common AI-related risks, TPR warned.

The guidance aims to help trustees with their understanding and management of these new risks.

Trustees were urged to assess their entire portfolio, rather than considering individual funds or asset classes on their own, with practical guidance provided to support risk and opportunity management.

TPR said it expected trustees to assess total portfolio exposure, including direct and indirect AI-related exposure across asset classes, and use scenario analysis to test portfolio resilience under ‘severe but plausible’ stressed market conditions.

Trustees were also encouraged to review whether diversification would remain effective if correlations changed during a downturn; to challenge investment advisers and managers on how market developments could impact their scheme’s investments and objectives; and to take proportionate action that reflected their scheme’s circumstances.

“We expect all schemes to maintain high standards of investment governance and manage risk over the short, medium and long term,” said TPR executive director of market oversight, Ben Gunnee.

“That is why trustees should assess their AI-related exposure, test portfolio resilience and challenge advisers now to understand how market developments could affect their investments under different market conditions.”

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