AI is already so ubiquitous that three-quarters of British adults now use it in some way every day, a government survey has found. But when it comes to money questions, making ChatGPT your trusted financial adviser is fraught with danger.
Pensions are a particular minefield. Those of us with workplace pensions need to know the specifics of the scheme we are in, especially as we approach retirement.
The problem is that those details may not be easily accessed by artifical intelligence. For example, a pension scheme’s website may display crucial information in a so-called “accordion” format – meaning some sections are revealed only by clicking on a heading.
When AI struggles with these websites, it either searches for generic information from similar-sounding schemes or simply makes up the advice based on what sounds plausible.
True, AI tools usually have small print that warn their advice could be wrong. But the consultancy Quietroom, which analyses pensions communications, found too many blunders for comfort.
In one case, AI responded to questions about a company scheme with answers about a different scheme with the same initials. In another, it reassured someone that they would be entitled to half their spouse’s pension in a divorce, failing to spot that this applies in the Netherlands, not in the UK.
Finding out more about your state pension ought to be straightforward. HM Revenue & Customs provides a calculator that tells you how much you’ll get and whether you need to fill gaps in your national insurance record.
However, it emerged this week that as many as 800,000 people might have received pension forecasts that were too high over a period of four years. This was because the tool did not deduct periods when someone had been “contracted out” – paying less national insurance to contribute more to a private or workplace pension. The error was first spotted in 2017 but not fixed until four years later.
It is galling to warn people of AI sloppiness when even HMRC can miscalculate something as fundamental as your state pension entitlement. But the answer isn’t to disengage altogether. Make sure you always go directly to your pension scheme for answers about how it works.
You can also sense-check a state pension forecast by comparing it with the underlying evidence: request your full national insurance record from HMRC, ask the Pension Service for a manual calculation and, if you were “contracted out”, contact your past schemes for the details you need.
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It is also worth verifying credits from the child benefit office and the Department for Work and Pensions to make sure none is missing.
Taken together, these checks will give you a far more reliable picture and stop you being misled by pension gremlins, wherever they might lurk.
Photograph by Nicolas Economou/NurPhoto via Getty Images