Is it time to embrace AI? Let’s ask it

Embracing the AI era

Artificial intelligence (AI) has become prominent across the UK, with Chancellor Jeremy Hunt backing an AI and quantum computing strategy in recognition of the potential benefits to the global economy. However, AI is far more than robots and digitalisation.

One key development is the public release of open-source advanced language models, such as ChatGPT, which can mimic human-like responses in a conversation format. ChatGPT (and other advanced language models) can discuss a wide range of topics: drafting emails, coding and answering questions.

To put it to the test, we asked ChatGPT to explain how it could help trustees of defined benefit pension schemes.

Question we asked:

“Please provide 200 words on how ChatGPT could help defined benefit pension scheme trustees”

Answer we received:
“ChatGPT can be an invaluable tool for defined benefit pension scheme trustees in several ways. As a sophisticated language model, ChatGPT can provide trustees with real-time access to vast amounts of information and expertise, enabling them to make well-informed decisions and navigate complex challenges more effectively.

  • Data Analysis and Insights: ChatGPT can process and analyse pension scheme data, investment trends, and actuarial reports. Trustees can leverage this capability to gain deeper insights into the scheme’s financial health, asset allocation, and risk exposure, facilitating more strategic decision-making.
  • Risk Management: Trustees can consult ChatGPT for risk assessment and mitigation strategies. The model can simulate different economic scenarios, helping trustees identify potential risks and evaluate the impact of market fluctuations on the pension fund.
  • Regulatory Compliance: Keeping up with evolving regulations can be challenging. ChatGPT can provide trustees with updates on the latest legal requirements and industry standards, ensuring the pension scheme remains compliant.
  • Investment Recommendations: Trustees can seek investment advice from ChatGPT, which can analyse market conditions and suggest suitable asset allocation strategies aligned with the scheme’s objectives and risk appetite.
  • Member Communication: ChatGPT can assist trustees in communicating complex pension concepts and updates to scheme members in a clear and easily understandable manner, promoting transparency and member engagement.
  • Education and Training: ChatGPT can act as a virtual tutor, providing trustees with educational resources on various pension-related topics, helping them enhance their knowledge and decision-making abilities.
  • Comparative Analysis: ChatGPT can help trustees compare their pension scheme’s performance against industry benchmarks and peer funds, enabling them to identify areas for improvement and best practices.”

 Can you trust AI?

Based on the feedback, it’s clear that AI and platforms like ChatGPT are going to play a major role in decision making that affects people’s lives. while the capacity to analyse massive amounts of data has many potential advantages, it cannot replace human experience, creativity, critical thinking and decision making. Data privacy and security also need to be considered when using such AI tools for sensitive financial matters.  Trustees should use the model’s insights as a supplement to their own experience, but always seek professional advice.

CA10411 Exp:07/2024

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