The Mercer CFA Institute's global pensions report, released on Tuesday, suggests that the implementation of Artificial Intelligence (AI) in pension systems could lead to significant cost reductions and provide early risk warnings. The report, co-developed with the Monash Centre for Financial Studies, outlines potential applications of AI, including the development of tailored portfolios and the identification of market discrepancies.
Analysts from Mercer assert that incorporating AI into investment management could result in more efficient and insightful decision-making processes. This integration could potentially increase returns for pension plan members. However, the report does caution that AI's ability to accurately predict market movements remains limited.
In addition to potential benefits, the report also highlights certain risks associated with AI integration. These include the generation of inaccurate data in unfamiliar scenarios and the threat of cyber attacks on pension members' data.
The 2023 index included in the report ranks global pension systems based on various factors. The Netherlands emerged at the top of this list, recognized for its robust private and public sector pensions, sustainability efforts, and high-quality governance. Iceland and Denmark secured second and third places, respectively.
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