Matthew Giles: For the pensions industry, the implications could be significant
UK pensions firms could soon face a new and largely unanticipated cost – a tax on their use of artificial intelligence (AI).
As AI rapidly replaces or reshapes work traditionally carried out by human employees, policymakers are increasingly exploring whether organisations – including those in the pensions sector – should be taxed on the ‘labour' performed by technology.
For a sector that is embracing AI at pace, the prospect of a future ‘robot tax' raises important questions about cost savings, workforce strategy and long-term investment in innovation.
AI is already firmly embedded in everyday life, from planning holidays to generating creative ideas. Its use across the UK economy is expanding quickly, with government statistics indicating that 73% of the public were using AI in their daily lives by December 2025.
Unsurprisingly, the pensions industry reflects this trend. A recent Society of Pension Professionals (SPP) survey found that 100% of respondent organisations are now using AI, up from 87% in 2025.
Within pensions, AI's applications are broad and still evolving. We are seeing its use in generating personalised member communications, producing report summaries and meeting minutes, and supporting trustee decision-making, including through training tools.
The Pensions Administration Standards Association (PASA) has also pointed to its potential in fraud detection, chatbot support for member queries, and analysing engagement levels.
As these applications become more advanced, AI is increasingly capable of performing tasks traditionally undertaken by pensions professionals. This raises difficult questions for employers about workforce planning: whether roles will need to be reduced, reshaped or redeployed. The impact is not isolated to pensions – across the UK, one in three workers reported using AI in the workplace by late 2025.
A reduction in human labour on this scale carries wider economic consequences. Fewer employees may mean lower income tax receipts for the government, alongside increased pressure to fund retraining programmes for displaced workers. This creates a fiscal gap at the same time as demand for public spending support may rise.
Against this backdrop, the idea of a robot tax is gaining renewed attention. Broadly defined as a tax on the use or output of automated systems, the concept has been discussed for several years. Its underlying rationale is straightforward – if technology replaces human labour, governments may seek to tax that technology in order to offset lost income tax revenues.
The proposal has attracted support from prominent figures in the technology sector. Bill Gates has publicly advocated for such a tax, and it has also featured in recent policy thinking from organisations including OpenAI. While no such regime has yet been introduced in the UK, the direction of debate suggests it is a realistic possibility rather than a purely theoretical one.
For the pensions industry, the implications could be significant. AI has often been viewed as a route to efficiency savings. However, if a robot tax were introduced, those expected savings could be reduced – or even reversed. Firms may face higher operating costs, and investment decisions around AI could become more complex, particularly if taxation acts as a disincentive to adoption.
Whether or not a robot tax materialises, the direction of travel is clear – the increasing use of AI will not only reshape how pensions services are delivered, but may also fundamentally alter the cost base of the industry.
Firms that are currently accelerating their adoption of AI should therefore keep a close eye on policy developments, as today's efficiencies could become tomorrow's taxable assets.
Matthew Giles is head of pensions at Squire Patton Boggs
