Any other business: For those feeling uneasy about the idea of sitting next to a Star Wars-style droid at a quarterly meeting, you can rest assured we are not likely to witness the rise of the robo-trustee anytime soon.
But it could happen one day. Artificial intelligence has already been cited as part of the solution to filling the pensions advice gap, so is it possible we will also see machines transform trusteeship?
Covenant monitoring
Ray Pygott, KPMG partner and head of trustee services, said: “We’ve never had so much data and information at our fingertips, and the ability to take all of that data and analyse it very quickly, very cheaply, has got to be the way forward.”
I’m not so flexible as to see myself being comfortable having a robot around the table with the same status as the other trustees
Alan Pickering, Bestrustees
Carillion’s recent collapse, with around 28,000 pension scheme members set to transfer into the Pension Protection Fund, is yet another reminder of the importance of covenant monitoring.
A robo-trustee could analyse information and assess the covenant, “automatically and virtually continuously”, and this would be very helpful in terms of establishing early warning systems, Pygott noted.
Artificial intelligence could also analyse vast amounts of historical data on how assets have performed, and “come up very quickly with an optimum investment asset allocation”, he suggested.
Looking at covenant strength, investment performance and funding assumptions involves dealing with large amounts of data and assessing how things have changed over time.
Lacking the human touch
However, Pygott said robo-trustees could become "a bit of a black box”, so there will be an element of oversight needed, particularly as artificial intelligence is introduced.
“Human intervention is still valuable, especially where you’re dealing with members," he said.
There are certain aspects of a trustee’s role that a robot would be unable to help with or replace, such as allocating death benefits to beneficiaries.
A member-nominated trustee’s ability to bring an emotional connection to the role is widely seen as a positive way to make member communication and engagement easier.
Pygott said the ability to understand human relationships will continue to be vital. “You could boil pensions down into being purely analytical, but we all know it’s not like that because it can become a very emotional and important part of [a] member’s life and planning.”
Having said that, people have become increasingly accustomed to using technology, and “human interaction may become less important in the future”, Pygott added.
Only 2 per cent of British people are very worried their jobs will be replaced by AI, robots or machines in the near future, according to YouGov figures.
While "defined benefit plans have clearly got a limited life", Pygott said a fintech company might invest in creating some sort of robo-trustee, consequently “changing the market quite quickly when other people don’t expect it”.
Vassos Vassou, senior trustee representative at Dalriada Trustees, said a robo-trustee could work where there is a well-defined process, such as integrated risk management.
Better data flow could transform pensions, but will it?
A yawning technology gap has long been identified in the sector, but many feel more than the dashboard is needed to drag pensions into the 21st century.
He echoed the view that this would involve looking at the covenant, analysing lots of data and telling you how much investment risk could be taken, for example.
“That could be a process that a robo-trustee could run through for you, and just tell you the answer.”
However, he also emphasised the importance of that human element to trusteeship, “in trying to produce a final result that allows for all the different stakeholders’ own positions”.
Liability could however be the biggest concern. Vassou said: “What if you had a robo-trustee, and you had something like BHS or Carillion happen, and people would say, ‘Well you used a robo-trustee’?”
Will robo-trustees get a seat at the table?
Alan Pickering, chairman of Bestrustees, said that as part of his trustee chair role, he will go around the table asking people for their views, making sure everyone gets a chance to speak, but “I just don’t know how I would engage a robot”.
Pickering said: “I’m not so flexible as to see myself being comfortable having a robot around the table with the same status as the other trustees.”
He added that he is “not uncomfortable at the idea of having a robot that can produce an output, either on the screen or audibly… but I would regard that more in the context of an adviser... rather than in the status of a co-trustee whose views or votes count pari passu with the views and votes of the other trustees”.
