AI Enhances Pensions Efficiency and Identifies Risks, but Faces Challenges – Report

         

Summary: Artificial intelligence has the potential to improve the performance of pensions by reducing costs and identifying risks, according to a global pensions report by Mercer CFA Institute. The report also highlights additional uses for AI, such as building customised portfolios and identifying market anomalies. However, the report cautions that AI is unlikely to accurately predict market movements. The survey, which evaluated 47 pension systems worldwide, ranked the Netherlands as the top performer this year, followed by Iceland and Denmark.

A global pensions report by Mercer CFA Institute has stated that artificial intelligence has the potential to enhance the performance of pensions by reducing costs and identifying risks. The report suggests that AI can facilitate more efficient and better-informed decision-making processes, leading to potentially higher investment returns for pension plan members. Additionally, the report highlights that AI can be used to build customised portfolios and identify market anomalies. However, the report also cautions that due to the inherent uncertainty of financial markets, AI is unlikely to accurately predict market movements.

The annual survey, which evaluated 47 pension systems around the world, ranked the Netherlands as the top performer. The country received top marks for the level of pension benefits available in the private and public sectors, the sustainability of the system for the future, and the quality of its governance. This ranking pushed Iceland, last year’s top performer, into the second position. Denmark secured the third spot in the 2023 index.

The report also highlights a couple of challenges associated with the use of AI in pensions management. One challenge is the potential for AI models to generate fake information when used in a new context, which could lead to misleading decisions. Another challenge is the risk of cyber attacks against pension members’ data.

In conclusion, while AI shows promise in boosting pensions efficiency and identifying risks, it also faces challenges in accurately predicting market movements and ensuring the integrity of data and information.

Tags: artificial intelligence, pensions, performance, risks, global report, Netherlands, Iceland, Denmark, financial markets, data security

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