The Pensions Regulator (TPR) has published guidance to help pension scheme trustees identify and manage hidden investment exposure to artificial intelligence (AI). Trustees should assess risks across their entire portfolio rather than individual funds or asset classes, as AI’s growing presence across sectors can leave even diversified portfolios exposed to common risks. The guidance calls on trustees to assess direct and indirect AI exposure across asset classes and use scenario analysis to test portfolios under severe but plausible market stress. Trustees should also review whether diversification would remain effective if correlations changed during a downturn and challenge investment advisers and managers on how market developments could affect scheme investments and objectives. Any action should be proportionate to the scheme’s circumstances, with risks managed over the short, medium and long term.
UK’s The Pensions Regulator issues guidance on hidden AI investment exposure across pension portfolios
The Pensions Regulator has issued guidance urging pension trustees to examine hidden direct and indirect AI investment exposure across their portfolios. Trustees should test portfolios against severe but plausible market stress, reassess diversification if correlations change during a downturn, and challenge advisers and managers on the implications for scheme investments and objectives.