LONDON (Reuters) – Artificial intelligence should improve pensions performance by cutting costs and highlighting upcoming risks, according to the Mercer CFA Institute’s global pensions report released on Tuesday. This year’s index ranked the Netherlands as the top performer.
The report also highlighted additional uses for AI in the pensions industry, such as building customized portfolios and identifying market anomalies. However, it emphasized that AI is unlikely to accurately predict market movements, leading to uncertainties.
“The ongoing expansion of AI within the operations and decisions of investment managers could lead to more efficient and better-informed decision-making processes, which could potentially lead to higher real investment returns to pension plan members,” said David Knox, senior partner at Mercer.
The annual survey, sponsored by the CFA Institute association of investment professionals in collaboration with Mercer and the Monash Centre for Financial Studies, also discussed the risks associated with AI models. These included the possibility of generating fake information when used in a new context and the vulnerability to cyber attacks targeting pension members’ data.
The Netherlands emerged as the top-ranked country in the survey of 47 pension systems worldwide. It scored highly for the availability of private and public sector pension benefits, the long-term sustainability of its system, and the quality of its governance. This displaced Iceland, which had held the top position in last year’s index. Iceland came second, followed by Denmark in third place for 2023.
Carolyn Cohn, reporting for Reuters, contributed to this article. Alexander Smith handled the editing.
