Will a robot
give me its pension?

Our viewpoint

Future Pensioners, policy-makers and the industry should be considering how to adjust for the impact of an automated future, says Alex Waite.

Technology has been steadily taking over tasks previously undertaken by humans for years, from the bell-hops replaced by key-carded lift buttons to self-service tills in shops and the driverless taxis already on the roads and gathering pace around the world.

The era of artificial intelligence (AI) is upon us, and that has consequences, not just for jobs, but for pensions too.

AI will of course transform the kinds of jobs humans do, rather than eradicate them altogether. There will always be jobs which require professional expertise, creative flair, human interaction and the personal touch, but the reality is that AI will alter the landscape in ways which are, as of yet, not fully clear.

Future intelligence

For Future Pensioners, policy-makers and the pensions industry, this raises questions around how we provide for retirement in a future dominated by AI. Should we - and to what extent can we - start planning now to anticipate, manage and mitigate the impact of such a shift?

Robots will of course not be contributing to a pension – at least not for themselves or anytime soon! This does, though, raise questions around taxation, namely, how will governments replace the tax receipts that were previously obtained from employment? Those receipts are critical to fund State benefits, and there will be an even greater need for that tax revenue if AI changes the dynamics of the employment marketplace.

In the recent budget, we saw the Chancellor attempt to grapple with the thorny issue of how to tax multinational technology giants effectively on their UK earnings, by introducing a Digital Services tax on sales generated in the UK. It remains to be seen how successful that will be. In the future, will governments be willing and able to tax technology companies more heavily to compensate for a scenario where software makes a human role obsolete? The logistical difficulties of doing so suggests this is highly unlikely.

While there are threats, AI creates a number of opportunities when it comes to pensions too. As I’ve argued before, the pensions industry should step up investment in AI for its own ends. This not only to boost engagement and increase transparency – for instance with an artificially intelligent pensions assistant that can answer technical questions or provide information on products and potential investments’ – but to also design better solutions and ultimately generate improved outcomes for Future Pensioners.

Winning over public opinion

As yet, there is still some way to go before the British public fully embrace the possibilities AI could bring. Our recent research (undertaken in conjunction with YouGov) on the extent to which the British public would trust retirement planning and savings advice given by artificial intelligence found that a staggering 57% wouldn’t trust advice from a robot, while only 28% would.

While this is a challenge, it is encouraging to see more open-mindedness among younger people, with almost half (45%) of 18-24 year olds saying they would trust robo-advice, compared to 19% of those aged 55+. Pension advice is already provided by “Robots” in some countries. For example, this is seen in a number of countries in the Far East, where regulations are less stringent than in the EU, and adoption of technology is the default. The next generation appears to be ready to embrace the power of technology when it comes to financial management and retirement savings. Advisers and providers must harness this willingness in order to engage Future Pensioners at an early stage.

A stitch in time

Although robots aren’t going to put us all out of a job, it does bring the potential for significant change. We must all consider what that might mean and what we can do to safeguard the future. No-one can be certain as to the type of work they will be doing in 30 or even 10 years’ time – the best thing we can do is to be prepared for change.

For Future Pensioners that means saving as much as possible as early as possible, both to maximise the impact of compound interest over time and to mitigate the risk that incomes may not necessarily always follow an upward trajectory, as previously assumed. That’s only sensible: AI or no AI.

Policy-makers and the industry can, with proactive forward planning and risk modelling, help us meet these challenges head on.


About the survey

All figures, unless otherwise stated, are from YouGov Plc.  Total sample size was 2008 adults. Fieldwork was undertaken between 22nd - 23rd August 2018.  The survey was carried out online. The figures have been weighted and are representative of all GB adults (aged 18+).

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