As we navigate through the fourth industrial revolution, it's impossible to ignore the enormous potential of Artificial Intelligence (AI) and its implications for various sectors, including the pensions industry.

I recently had the privilege of addressing a room full of pensions actuaries from across the industry about AI, providing insight, dispelling myths, and discussing its potential. I learned a lot, so I thought it was worth sharing some personal takeaways from that discussion.

Can we bring it back from Science Fiction to day-to-day reality?

When we hear "AI," we often conjure images of autonomous robots or visions of human extinction popularised by Hollywood – a narrative fuelled by plenty of sensational headlines. While these make for thrilling entertainment, the professionals in the room were keen to understand what AI means for the future of their everyday work in the pension industry.

AI is about enhancing efficiency, accuracy, and personalisation. It's about deploying chatbots to address common member queries, using machine learning to predict trends, or tailoring products to individual member needs based on data analysis. It's not about dystopian futures, but about augmenting our abilities and improving the services we provide to our clients today in an ever more human way.

What do we mean by AI anyway?

There was a fascinating discussion around the varied use of the term "AI", revealing a spectrum of understanding and application. At one end, AI refers to complex Machine Learning techniques deployed over massive datasets, facilitating trend prediction, and intelligent decision-making. At the other end, it might refer to simply interacting with the Bing search engine, which is now supported by ChatGPT.

It's vital for industry professionals to understand the different forms of AI and their potential applications – and risks – within the pensions landscape. This understanding is still being amassed, but ultimately it will ensure that we leverage the technology to its fullest potential.

Will the AI-Actuary take my job?

A recurring concern is the fear of AI usurping people’s jobs and pensions professionals are no different. However, we have seen many technological changes in the past that have elevated people’s roles, rather than replaced them. For instance, the simple spreadsheet can do much of the work that accountants and actuaries laboured over in the 1980s – but we have moved forward into a new world. The questions we ask now – and the answers we can provide – are elevated by the new technology.

After a healthy discussion, the consensus was that AI can augment our roles. The technology's capacity to automate routine, mundane tasks can liberate pensions professionals to focus on analysing trends, providing strategic advice and, developing innovative solutions to client issues. Ultimately, an actuary working with AI can add more value than either working alone.

Indeed, AI reveals important potential biases in our work, and actuaries are really well placed to understand both the mathematics and the ethics of AI output, so that such biases can be identified and rectified.

Should the pensions industry embrace the AI revolution?

Yes! What resonated most from the dialogue with these pensions actuaries was the eagerness to embrace the AI revolution. After all, AI's promise of logical reasoning combined with ethical considerations aligns perfectly with the skill set of pensions actuaries.

As the pensions industry continues to explore AI, it's clear that this technology's adoption is not about replacing human expertise but enhancing it. AI could transform many aspects of the industry, including risk management, member engagement, and client satisfaction. The road to fully realising AI's potential in pensions may be long, but our journey has certainly begun. By embracing AI, we can augment our capabilities, improve our services, and ensure the pensions industry remains resilient, relevant, and ready for the future.

I left the discussion uplifted about the combination of pensions, actuaries, and AI working together. There’s already been too much discussion about the “AI winning”, let’s talk more about “How we win with AI”!

If you would like to learn more about how LCP is approaching AI, listen to our Beyond Curious podcast here.