UK’s pensions use of AI nears 90% and expected to increase ‘significantly’

AI is currently only used in 1-5% of services provided by the UK pensions industry, but this is expected to increase “significantly” in the next 10 years, according to a survey conducted by the Society of Pension Professionals (SPP).

The survey results indicate widespread adoption of AI within the UK pensions industry, with 87% of respondents confirming that AI is being used by their firm.

However, the survey also revealed that more than three-quarters of respondents (77%) currently used AI in only 1%-5% of their services.

That said, in the next 10 years, the use of AI in the pensions sector is expected to increase significantly. With 41% of the survey respondents stating that they expect AI to be used in 10-20% of their services, 41% expect it to be used in up to 50% of their services and the remaining 18% expect it to be used in more than 50% of their services.

The respondents identified an increase in speed, highlighted by almost two-thirds (61%) of respondents, and a reduction in costs (26%) as the main benefits of AI.

Further anticipated benefits include the additional insight that AI could bring in terms of analysing patterns within large data sets and identifying unusual data (allowing problems to be detected and addressed at an early stage), scalability and increased personalisation.

However, there are also risks. According to two-thirds (65%) hallucination/inaccuracy is the biggest risk. A significantly smaller number of respondents identified bias (10%), and data protection/cyber security (6%) as potential risks. Meanwhile, some 19% do not see significant risks if AI is managed well.

While there is an interest in the adoption of AI, there are several barriers. This includes organisational nervousness (39%), customer concerns (16%), the cost of adoption and integration of AI (13%) and regulatory restrictions (3%). Nearly a third (29%) of respondents said that there is no significant barrier to the widespread adoption of AI.

SPP’s survey gathered views from its members, including pension administrators, actuaries, consultants, investment/covenant advisers, lawyers and professional trustees.

Speaking with IPE for an upcoming report on AI in pensions, professional trustees expressed cautious optimism towards AI, exploring the various applications from improving efficiency to customer service.

However, they stressed the industry is still in the “early stages” of AI adoption. And while full transformation is possible, a phased approach will be needed with a focus on improving existing processes and data management.

Matthew Giles, SPP council member and a partner at Squire Patton Boggs, said: “The survey results are very helpful in terms of testing the mood of the pensions industry on AI. We have obtained a helpful snapshot of the extent to which AI is being utilised today and also a forecast of how adoption will increase in the future.

“Although the survey highlights risks and barriers to more widespread use of AI, it also identifies clearly identifiable benefits and overall indicates considerable enthusiasm for the technology within the pensions sector.”

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