UK Pensions Regulator Warns Trustees Over Hidden AI Exposure, Urges Stress Tests

Britain's Pensions Regulator on Thursday urged pension trustees to assess direct and indirect AI-related exposure across asset classes and stress-test portfolios under severe market stress, warning that funds may hold more AI risk than trustees realise. The regulator said AI is increasingly embedded across sectors, meaning even apparently diversified portfolios could carry "hidden exposure." Ben Gunnee, executive director of market oversight, said trustees should test portfolio resilience and challenge advisers on how market developments could affect investments under different conditions. The warning echoes a Bank of England report in July flagging limited transparency in some AI funding arrangements, which could obscure the scale of risk and make any selloff in highly valued AI stocks broadly felt. Global corporate investment in AI-related activity more than doubled in 2025, according to Stanford's 2026 AI Index Report.