Why AI will transform pensions administration

26th February 2024

Civica’s Chris Jones casts his view on the increasingly hot topic of AI. Is it really coming to take over pensions administration?

By Chris Jones, Managing Director, Civica.

AI is coming for pension administrators’ jobs. But in a good way. I’m exploring how this technology is perfectly suited to removing the complexity, so local authority pension schemes can provide a better service to members and give their staff a more rewarding career.

“I really wanted to get a look at it, but the queue was too long!”. What was this delegate to Civica’s stand at the 2023 Local Government Pension Scheme (LGPS) Pension Managers’ conference in Torquay, UK, so keen to see? A chatbot. More specifically, an AI-powered chatbot designed for pension administrators.

This may not, on the face of it, sound like the most glamorous application of a technology that’s currently the talk of the tech world. So why was it attracting so much interest at a Pensions conference? It’s because pensions administration is the perfect example of a role that could be positively transformed by AI.

Skilled yet repetitive

To understand why, we need to look at the job itself. First, the title significantly undersells the role. Being a pensions administrator is a complicated job. The remit goes well beyond administration. It can involve complex calculations, decades-long customer relationships and interactions with employers, investment managers and actuaries. It’s a great deal of skilled work. But it also involves many tedious (yet important) administrative tasks, and plenty of work keeping data up to date and accurate.

As a result of this, pensions administrators are becoming increasingly hard to attract and retain. High-potential recruits tend not to gravitate towards the aspects of the job involving repetitive administration. And administrators themselves, skilled and qualified as they are, can be easily inclined to move to roles that involve less of this kind of work.

All the AI boxes ticked

This combination – work that needs skilled people but also includes a great deal of repetition – is perfect for augmentation by AI. Pensions administration is a particularly perfect example of it. That’s because it ticks all the boxes for a problem that current AI technology can solve.

Pensions administration involves prediction, inference, and recommendation, all of which AI does reliably, given the right data. It uses text-based documents with long time horizons, which are ideal for computer analysis. And the sheer volume of data – both in terms of the barrage of queries that come in and the datasets involved – is something else that AI models deal with effortlessly. Finally, high-volume, resource-intensive tasks, which nonetheless need a skilled human to carry out, are crying out for automation.

This is why there was a queue in Torquay. Our Chatbot, an AI language model trained on pensions legislation, gives quick and accurate answers to very complex questions. For example, it could tell an administrator what would make a firefighter with 20 years’ service eligible for retirement through ill health.

Creating better work

Pensions administrators should not, however, fear for their jobs. Used this way, AI is a ‘co-pilot’. It takes care of essential and basic work, while freeing up the skilled practitioner to do more added-value (and therefore interesting and rewarding) work, like talking to scheme members, providing better service – and no longer having a huge backlog to deal with.

So, what's next for Civica?

We’ve designed an AI chatbot to reduce the administrative burden, allowing administrators to focus on more complex issues. Our chatbot will enhance member and staff experience, ensuring efficient and personalised interactions. It will be able to adapt to changing regulations and updates more quickly, improving compliance and accuracy in pension administration processes. So, if you’re a pension administrator, AI is almost certainly coming. But it’s coming to help, not to take your place. This is the art of the possible and we’re at the forefront of exploring it.

Get in touch if you’d like to hear more or discuss how we can help you.