Public pension allocators are broadly optimistic about the efficacy of AI tools in administration, but humans need to make the final decisions. A recent survey from the National Conference on Public Employee Retirement Systems (NCPERS) shows that 58 percent of pension allocators consider themselves optimistic or very optimistic about AI's impact on public pension administration over the next decade.
The survey focused on using AI in the operations and the benefit administration side and not its use in the investment process.
Matt Eckel, director of research at NCPERS, noted that the main areas where pensions are using AI are in communication, customer services, and administrative task automation. “There really has been a sea change in how pensions are looking at AI use in their day-to-day administrative functions,” Eckel said. “Overall, it’s a picture of responsible experimentation.”
Public plan allocators believe AI can make operations more efficient, such as interacting with retirees and active employees. But this enthusiasm is tempered: 63 percent of respondents cite a lack of in-house technical expertise as the biggest barrier to adoption, while 43 percent identify cybersecurity vulnerabilities as their top risk concern.
“There are weighty concerns here. The potential loss of trust from an improperly integrated AI system is pretty high,” Eckel added. “So, folks are being cautious.”
Almost all respondents—96 percent—say that there still needs to be a human making the final decisions wherever AI tools are used. “Pretty much everybody seems to recognize it’s important that people remain in the drivers’ seat,” Eckel added.
Hank Kim, CEO of NCPERS, said that public pensions understand AI very differently now than they did two or three years ago, when there was an overabundance of evangelizers for the promise of AI and a dearth of deliverable results. So, public plans adopted their typical ‘wait and see’ approach, he said.
“There was a growing awareness of this new market, but as public pensions, we are not early adopters. We like to see how the landscape matures,” Kim said. Now, most NCPERS members say they’re tired of the promise and want to see how AI works in practice.
“Some plans have overcome some of their concerns or lack of resources and have infused the resources needed to adopt AI,” Kim added.
NCPERS plans to release a survey on members’ thoughts on using AI for the investments and back-office side later this year or in early 2027.
