While designed to improve scale and member outcomes within the system, the changes are also expected to significantly increase the volume, complexity and breadth of data that providers will need to manage prudently.
It means that the careful application of AI, unified systems and modern technology processes will be required for providers to position themselves for future growth.
A key example is the new requirement for trustees to provide ‘guided’ default retirement pathways for members of trust-based DC pension schemes. This will require trustees to define membership groupings that best fit a particular default pathway, and to refine these groupings as more data becomes available.
This ongoing data challenge is not only a ‘good fit’ for the use of AI - it can be argued that it almost demands the use of AI to ensure that trustees make the best use of the data they hold when making the critical decision to assign members to default pathways.
The adoption of AI in scenarios like this will rightly require high levels of trust. This trust will need to be earned through robust governance, operating models and technology, evidenced to be compliant with all existing legislation, and any future guidance that regulators produce.
AI is already being applied to tackle other challenges across the pensions market, and its careful application, alongside human expertise, will also be vital in handling some of the other operational pressures that will build as a result of the Pension Schemes Act, with its focus on large-scale consolidation and new standardised requirements to assess Value for Money.
As AI develops further and becomes more integral over the coming months and years, it is set to become a key enabler of a more automated, standardised and resilient pensions infrastructure in the UK, according to
Maurice Titley, Commercial Director, Data & Dashboards at Lumera commented: “As we enter a new era for the pensions sector in the UK, AI is set to be a critical driver of transformation in how providers achieve greater efficiencies and improve the member experience.”
“Greater automation and use of AI will play a critical role in supporting the evolving requirements and regulations contained within the Pension Schemes Act that the industry must comply with. Innovative operating models, human oversight and robust governance will be at the centre of this drive, giving trustees and providers the confidence to capitalise on AI’s full potential. It creates an opportunity to improve administration, standards and outcomes right across the pensions sector, enhancing rather than replacing the expertise that defines the industry.”
“Investment in these technologies will be critical to extracting maximum value over the long-term and achieving a market that is prudent, progressive and people-centric.”
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