The Pensions Regulator (TPR) has published guidance encouraging trustees to explore how they can embrace the opportunities presented by artificial intelligence (AI) in a responsible manner.

Trustees were urged to consider how the technology can help provide better member outcomes while understanding and managing the risks it presents.

The regulator said AI had the potential to transform the pensions industry through improved efficiency, value for money, and member outcomes.

However, it warned that it could also introduce new risks, including around cyber security.

While TPR said trustees do not need to be experts in AI, it wanted them to understand enough to ask the right questions and challenge its use effectively.

The guidance outlined seven ‘key principles’ for trustees and scheme managers, which match how the regulator itself uses AI.

The principles tell trustees to start with the problem, not the technology; that human responsibility remained central; that governance was ongoing, not a one-off; and to plan for disruption.

They also state that good AI started with good data; that transparency and explainability underpinned trust; and that AI should support fair and accessible outcomes.

TPR noted that the guidance helped trustees to understand how their existing duties and good governance applied to using AI, rather than creating a new set of regulatory requirements.

Trustees remained responsible for decisions affecting schemes and members, TPR added, and should understand where AI is being used and ensure that appropriate governance and oversight are in place.

The data and digital industry working group, established by TPR, has also developed an AI ‘jargon buster’, aiming to support trustees with understanding terminology and in discussions with providers and advisers.

“AI has the potential to improve efficiency, value for money and member outcomes and cannot be ignored,” said TPR executive director of market oversight, Ben Gunnee.

“Trustees should responsibly embrace the opportunities on offer. Trustees don’t need to be AI experts, but they are accountable.

“They must always know where it is used, ask the right questions to challenge providers, and manage risks that any new technology presents.”

Association of Consulting Actuaries AI Steering Group chair, Kiran Mandalia, added: “TPR has rightly taken a principles-based approach here: one size doesn’t fit all.

"AI can feel daunting for some trustees, and a clear set of questions to work through gives them a practical place to start.

"ACA members will be among the key advisers helping trustees answer them, and we look forward to continuing to work with TPR on this.”

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