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The Pensions Regulator is encouraging schemes to explore how AI could deliver better outcomes but says trustees need to understand and manage risks, in new guidance published on Thursday.
The guidance follows TPR's AI plan from May this year, and the Financial Conduct Authority's good and poor practice examples put out on 19 October . TPR said trustees need to understand enough to ask the right questions and challenge its use effectively.
“AI has the potential to improve efficiency, value for money and member outcomes and cannot be ignored. Trustees should responsibly embrace the opportunities on offer. Trustees don’t need to be AI experts, but they are accountable," said TPR's executive director of market oversight, Ben Gunnee.
"They must always know where it is used, ask the right questions to challenge providers, and manage risks that any new technology presents,” he added.
TPR lists seven principles for trustees and scheme managers, which mirror how the regulator itself uses AI:
start with the problem, not the technology, using AI to solve real problems and support better member outcomes, efficiency and value for money.
Human responsibility remains central as trustees remain accountable, including where work is outsourced. TPR said AI should support, not replace, trustee judgment and meaningful challenge.
Governance is ongoing, not one-off, meaning trustees need to keep AI risks and controls under review throughout its lifecycle. Oversight and human involvement should be proportionate to the risks.
Plan for disruption – understand AI dependencies and include them in business continuity planning, so the scheme can keep operating if AI fails or becomes unavailable.
“Good AI starts with good data”: trustees are asked to use accurate and appropriate data, understand its limitations and protect it through effective data handling and data protection arrangements.
TPR also said that “transparency and explainability underpin trust”, encouraging trustees to consider what members need to understand where AI affects them and be able to explain AI-informed decisions.
Schemes need to support fair and accessible outcomes, meaning trustees need to address bias, reflect vulnerable and digitally excluded members’ needs, and ensure outcomes comply with scheme rules.
The regulator pointed to a survey of 61 UK defined benefit pension schemes by Aon which suggested 76% use AI, but 61% did not know how their advisers use AI and 73% carried out no specific assessment of their providers’ AI governance.
The guidance aims to help trustees understand how their existing duties and good governance apply to using AI, rather than creating a separate set of regulatory requirements, TPR said, emphasising that trustees remain responsible for decisions affecting schemes and members.
The guidance includes a set of questions that "every trustee or scheme manager should be able to answer" for each significant use of AI, whether internally or by external providers:
What AI do we use?
Why do we use it?
What member outcome or internal process does it improve?
What decisions may it influence?
What data does it use and how is the data handled?
Who is accountable?
How is it tested?
How can a decision be challenged by the users, or by members?
How can humans override it?
What happens to the process if the AI fails or becomes unavailable?
The Society of Pension Professionals' council member Matthew Giles said the guidance provides a helpful starting point for trustees and their advisers to ask questions, understand the risks, and embrace innovation responsibly.
"It is encouraging to see a proportionate approach that builds on existing duties rather than creating unnecessary new requirements, helping the pensions sector navigate this rapidly evolving landscape with confidence,” he said.
The Association of Consulting Actuaries was also supportive. Kiran Mandalia, who chairs the ACA’s AI Steering Group, said: “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.”
Aon partner Paul McGlone said both the speed at which schemes are adopting AI and at which TPR is issuing guidance was "noticeably quicker than previous challenges such as dealing with cyber risk, which took many schemes years to properly consider".
He welcomed the guidance, saying it echoes Aon's view that schemes should avoid treating AI as a standalone technology project but as something more intrinsic.
"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. Schemes will need to devote time to properly considering the guidance, digesting it fully, and thinking about how to apply it in a proportionate way," he said.
