Technology and automation permeate all areas of modern life, and the pensions industry is catching up.
But exactly what benefits will this bring, and how will savers see things differently?
Disruption and innovation have not traditionally been terms naturally associated with the long-term world of savings, but the era of artificial intelligence (AI) is now upon us.
Whether it is driving our cars, executing smart contracts, delivering groceries or responding to our voice commands, robots are increasingly doing the legwork for us.
On the one hand, having automated systems to help us is good news: the UK, along with many other western democracies, is facing a demographic time bomb that will see many more people over 65 being looked after by relatively few people under 65.
If all the work is to be done, then a helping hand is welcome.
But there are also clear consequences of automation on the nature of employment, and therefore for savings.
With the transformation that automation is bringing to working methods, policymakers and future pensioners themselves must start to think about what retirement looks like in a future dominated by AI.
The opportunities presented by AI could lead to a sharp uptick in engagement on retirement savings as well as considerable improvements in UK productivity. But long-term thinking will be required to harness that potential.
Will robots pay tax?
There are several regulatory challenges to consider – for example, if employment taxation reduces due to fewer jobs, how will the tax man continue to raise sufficient tax in the future?
Will more of the burden fall on other forms of taxation, such as an increased level of VAT, and fewer tax-breaks for pensions saving?
Should robots pay tax on the work that they do?
I don’t think they should. I think we need more investment, and more automation. AI could be used to get the next generation saving.
To harness the full potential of automation, the pensions industry needs to step-up its investment in technology. For example, the ability to track and monitor retirement savings and investments using AI and in real-time could make pensions more of a routine concern.
Saving with Siri
Aside from the engagement benefits, this will also increase transparency and people’s ability to understand their pension provision. For example, an artificially intelligent pensions assistant – a retirement robo-consultant of sorts – could answer technical questions or provide suggestions for products and investment options.
We know there is a way to go before the possibilities AI may provide are fully realised, and LCP's recent research – conducted with YouGov – shows that more than half (57 per cent) of people are not yet prepared to trust savings advice from a robot, while around a quarter (28 per cent) would trust automated counsel.
Overcoming scepticism and mistrust is an issue for the whole savings industry to conquer, starting with greater financial education.