The Pensions Regulator (TPR) has urged UK pension scheme trustees to embrace artificial intelligence (AI) responsibly, warning that growing adoption brings challenges around governance, accountability and oversight of external providers.
In new guidance published on 29 October, TPR sets out seven principles for trustees and scheme managers, building on existing duties rather than introducing additional regulatory requirements. It also provides 10 questions trustees should be able to answer for each significant use of AI in their scheme.
The guidance follows separate TPR warnings last week about hidden AI-related investment concentration risks in pension portfolios, which can leave apparently diversified schemes exposed to common market risks.
The guidance comes as an Aon survey of 61 UK defined benefit (DB) pension funds found that 76% reported some use of AI by trustees. However, 61% did not know how their advisers use AI, while 73% did not specifically assess their providers’ AI governance.
Paul McGlone, partner at Aon, said: “This is comprehensive guidance and it will be a challenge for most trustee boards to influence practice quickly.”
He added that the pace of AI adoption and regulatory attention was noticeably quicker than previous challenges such as cyber risk, which took many schemes years to properly consider.
“The extent of it will be daunting for many and, in our experience, no scheme is currently able to say that they do everything that it suggests,” he said, adding that schemes would need time to digest the guidance and consider how to apply it proportionately.
Oliver Topping, partner at pensions law firm Sackers, said trustees and pension fund managers were not expected to be AI experts, but might need to develop an AI policy depending on their own and their advisers’ use of the technology.
He highlighted hallucinations and cyber threats as two risks, as well as potential dangers for members using freely available AI to help plan for retirement.
The Association of Consulting Actuaries (ACA) welcomed TPR’s principles-based approach, while the Society of Pension Professionals (SPP) said the guidance provided a timely and practical starting point for trustees and advisers.
Both organisations highlighted the importance of building on existing duties rather than creating unnecessary new requirements.
