There is no doubt that AI was this year's hot topic. Industry leaders are consequently trying to understand and grasp how this new technology will impact their industry and to what extent. The pension plan consulting and administration industry is no exception. The integration of AI into our industry promises to revolutionize how we work, serve our clients, and help plan members achieve their retirement goals. This paradigm shift has already begun; here's what we've seen change thus far.

Streamlining Workflows and Enhancing Capabilities

The advent of AI in this field is not about replacing human actuaries but about augmenting their capabilities and allowing them to focus on what they do best - complex analysis, strategic decision-making, and providing nuanced, value-added insights to pension administrators. AI-driven tools are increasingly being employed to streamline day-to-day workflows, handling repetitive tasks with speed and precision that were previously unimaginable.

AI's impact extends beyond workflow streamlining; it's breaking down innovation barriers. It makes exploring new ideas less time-intensive, fostering a different approach to problem-solving. This shift allows for more mental exploration before decision-making. While it may not seem revolutionary at first glance, it enables the creative mind to pursue novel solutions that might have been previously overlooked due to time or risk constraints. In essence, AI is quietly expanding – and lowering – the boundaries of what's possible in our field.

In terms of capabilities, one of the most significant advantages AI brings to actuarial work is the ability to process and analyze vast amounts of data. With more data points and sources readily available through AI engines, actuaries can now enhance the accuracy of their calculations and the precision of their recommendations. This data-driven approach allows for more robust risk assessments, improved forecasting, and the ability to spot trends that might be missed by traditional analysis methods. For instance, AI systems can scrape websites to find and summarize a substantial amount of data in a few seconds. This capability is particularly crucial in today's volatile economic environment, where quick adaptation to changing market conditions can make a significant difference in fund performance.

Revolutionizing Member Services

Beyond the back-office improvements, AI is driving innovation in pension plan member services. One exciting development is the implementation of AI-powered chatbots and virtual assistants. These tools provide personalized insights and help members make informed retirement decisions, ultimately optimizing outcomes for individual participants.

These AI-driven interfaces can offer 24/7 support, answering member queries about their pension plans, providing real-time account information, and with appropriate guardrails could make asset allocation suggestions, or raise considerations based on the member’s unique investor profile, particularly in CAP arrangements.

Moreover, these interfaces will eventually be capable of handling complex modeling and stochastic projections to allow for more comprehensive and accurate decision support. This enhanced capability would mean members can explore a wider range of retirement scenarios and receive more nuanced guidance. This level of added sophistication, access and scalability, will help better prepare plan members for retirement.  

AI-assisted programming is opening new possibilities for rapid development of sophisticated tools. Gone are the days when lengthy development time was needed to create a relatively simple Excel tool for basic calculations. Using AI copilots like GitHub Copilot, pension professionals can now create custom analytics solutions much faster than traditional methods. This allows for quick development of tools that can analyze member data, predict trends, and generate insights far more efficiently than conventional spreadsheet-based approaches. These AI-powered analytics tools enable pension administrators to offer more personalized services, such as tailored retirement planning scenarios or real-time fund performance analysis, enhancing the overall member experience.

The Need for New Skill Sets

While the benefits of AI in pension plan consulting and administration are evident, leveraging this technology effectively requires professionals to develop new skill sets. One emerging specialty field is prompt engineering - the art of crafting effective instructions for AI systems to produce desired outputs. Although AI systems are designed for casual interaction, akin to conversing with a colleague, complex requests still require structure, completeness, and clarity. This new skill set parallels that of a solutions architect; it involves breaking down intricate problems - or requests - into manageable components to facilitate more effective responses. As the pension industry increasingly adopts AI technologies, mastering these skills will become crucial for professionals seeking to optimize their use of these powerful tools.

As actuaries, we must embrace these new technologies and adapt our skills accordingly. This doesn't mean becoming computer scientists overnight, but rather understanding how to effectively collaborate with AI systems, interpret their outputs, and apply our professional judgment to the insights they provide.

Strategic Integration of AI in Business

For businesses in the pension consulting and administration sector, the integration of AI must be approached thoughtfully and strategically. It's not just about adopting the latest technology; it's about reimagining how we work and serve our clients in an AI-augmented world.

Some effective strategies for integrating AI include:

1. Establishing internal AI groups: These teams can spearhead AI initiatives, ensuring that the technology aligns with the organization's goals and values. They can also be responsible for staying updated on AI news, developments, and new products and capabilities to come.
2. Developing comprehensive training programs: Equipping staff with the skills needed to work effectively with AI tools is crucial for successful implementation.
3. Identifying areas for immediate impact: Start with low-hanging fruit - areas where AI can quickly demonstrate value, such as proof-reading, summarizing and brainstorming. 

Ethical Considerations and Challenges

As the pension plan consulting and administration industry embraces AI, it is important to remain mindful of the ethical considerations and challenges inherent to this technology. Issues of data privacy, algorithmic bias, AI hallucinations, and the transparency of AI decision-making processes must be carefully addressed.

Professionals have a responsibility to ensure that AI systems are used ethically and in the best interests of plan sponsors and members. This includes regular auditing of AI systems for fairness and accuracy, and maintaining human oversight in critical decision-making processes. Indeed, it is widely accepted that any output from an AI system should be carefully reviewed by a professional before implementation.

Conclusion

The integration of AI in pension plan consulting and administration is progressing steadily, and its potential is truly promising. By embracing this technology and developing the skills to leverage it effectively, professionals can enhance their expertise, improve the accuracy of their work, and provide better services to plan sponsors and members alike.

However, as the industry moves forward, professionals must remember that AI is a tool to augment human expertise, not replace it. The nuanced understanding, ethical judgment, and strategic insight that human actuaries bring to the table will remain invaluable. The main challenge - and opportunity - is to harmonize professional expertise with the power of AI, creating a future where technology and human insight work hand in hand to secure better retirement outcomes for all.

About TELUS Health

Over the past decades, our compensation, retirement and benefits solutions teams have contributed to the financial health of thousands of organizations and their employees. Through the unified strength of TELUS Health, our experienced teams strive to provide innovative, sustainable and flexible solutions that meet the compensation, retirement and benefits needs of customers across North America. https://go.telushealth.com/en-ca/personalized-consulting-services

Samuel Desrosiers, AICA, Senior Analyst, TELUS Health

Samuel Desrosiers, AICA, has been working in pension risk and asset management at TELUS Health since 2021. He also has experience in pension administration. He is a Senior Analyst in the Consulting group in the Montréal office. His experience includes longevity risk modeling, active-passive modeling, developing and implementing risk transfer strategies, and researching, selecting, and evaluating portfolio managers. Samual works closely with TELUS Corp.'s AI Connect integrating AI and actuarial copilots into actuarial processes, focusing on innovation and practical applications. Samuel received his B.Sc. in Actuarial Science from Université Laval in 2020 and is an Associate of the Canadian Institute of Actuaries (ACIA).