Defined benefit (DB) pension scheme trustees and sponsors have been urged to “reap the benefits” of recent advancements, including artificial intelligence (AI) and generative AI, after PwC’s analysis found that DB funding levels have remained “stable and strong”.

According to PwC’s buyout index, DB schemes continue to have sufficient assets to buyout their pension promises with insurance companies, recording a surplus of £260bn in June.

In addition to this, PwC’s Low Reliance Index, which tracks the position of the UK’s DB schemes based on a low-risk income-generating investment strategy, showed that UK corporate DB schemes maintained a record £400bn surplus.

PwC head of pension funding and transformation, John Dunn, said that, with funding levels of the UK’s DB schemes remaining stable and strong, sponsors and trustees need to focus on forward planning and efficient running of their pension schemes.

In particular, Dunn suggested that, while technology has already played a "critical role" in the last few years to increase real time information and help schemes make decisions more quickly, "another wave of change is coming".

"AI is increasingly a part of our daily lives - from automation to augmentation and beyond," he continued.

“The key question for sponsors and trustees is - how can they harness AI’s power to benefit their pension schemes? Our research shows that, by 2030, AI will provide $15.7trn of global economic growth.

“Those pension schemes, both in the private and public sector, that take the lead now will ensure a share of this growth can benefit their members.”

Indeed, PwC head of pensions technology and AI, Gavin Sharma, also highlighted the findings from a recent PwC event poll, which found that over 70 per cent of respondents said they expect AI to substantially impact the pensions industry within the next five years.

"It’s clear that many people believe an AI related change is on the horizon," he continued.

“A recent PwC survey found that sectors with highest AI penetration are seeing almost fivefold (4.8x) greater labour productivity growth.

"We’re already seeing AI being used in pension schemes to increase operational efficiency - from automating data processes to drafting scheme documentation. And in the near future we can also expect to see AI being used to personalise the member experience and to bring insights that enhance decision making."

However, Sharma warned that "it can be easy to get swept up in the excitement of AI opportunities".

"Being aware of potential risks and having the right governance processes in place are key - particularly given the large amount of sensitive data held by pension schemes," he continued.

"With most organisations being relatively early on in their AI journey, there is a lot for sponsors and trustees to consider - but the rewards on offer once they have harnessed its opportunities are likely to be considerable.”

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