What Y2K Can Teach Public Pensions About AI, Cybersecurity, and Managing Risk Today

By: Hank Kim, CEO, NCPERS

In a recent conversation about how public pensions are addressing artificial intelligence and cybersecurity risks, I found myself thinking about Y2K.

At the time, many viewed what is now almost laughable as a real threat. That concern was driven largely by a lack of understanding about how rapidly evolving technologies functioned. Public perception often filled in the gaps where technical knowledge was limited.

Time offers new perspective, though, and the world looks very different today than it did less than 30 years ago. Still, many of the fundamentals of managing risk in public pensions remain the same.

Then and Now: Evolving Risks, Familiar Challenges

Back then, public pension systems were likely fielding calls from plan participants asking whether their retirement benefits were safe from the Y2K bug. Today, those concerns have shifted, not disappeared.

Pension plans now address questions driven by misinformation circulating on social media or generated through AI tools like ChatGPT. The technology has changed, but the core challenge remains. Participants want reassurance, clarity, and trust.

We see a similar pattern in investment strategy. Before the Great Financial Crisis, many public pensions relied more heavily on public equities. Over time, and with a clearer understanding of risk, portfolios evolved toward more diversified and complex asset allocations. Today’s approach reflects lessons learned, but it will continue to shift as markets change and new economic events emerge.

Navigating Risk in a Rapidly Changing Environment

As stewards for the retirement security of millions, public pension professionals must stay informed about emerging risks, from AI applications to cybersecurity threats, to make sound decisions and protect plan assets.

Technologies, regulations, and financial markets continue to evolve at a rapid pace. As they do, best practices in risk management, cybersecurity, and investment strategy must evolve as well.

But while the world looks very different today, what remains unchanged is the critical importance of effective stakeholder engagement and participant education. Clear communication has always been central to maintaining confidence in public pension systems.

The Critical Role of Communication and Trust

Whether pensions were mailing informational materials to retirees about how to prepare for Y2K, or today are sharing guidance on avoiding phishing scams and cyber fraud, the mission is the same. Plans must provide accurate, accessible information that helps participants understand and trust their benefits.

That responsibility is arguably more important now than ever before. In an era where information is available instantly, misinformation is equally accessible. Plan participants and members of the public can quickly encounter inaccurate or misleading content about public pensions, retirement security, or financial risks.

As Americans’ views of the economy grow increasingly negative—with Gallup’s Economic Confidence Index reaching its lowest score since 2022—it’s understandable that retirees and plan participants may fear for their financial futures. However, fear can make them more susceptible to believing false information about the stability of their pension.

For this reason, proactive and transparent communication is essential.

Across the country, public pension systems are rising to meet this challenge. Many are investing in modern communication strategies, including digital platforms, cybersecurity awareness campaigns, and explainer content for new employees. These efforts strengthen trust, which remains one of the most valuable assets for any pension system.

Preparing for the Future by Learning from the Past

While we cannot predict the future, we can try to prepare for it by learning from the past. Y2K serves as a reminder that uncertainty often accompanies technological change. It also reinforces the importance of informed leadership, adaptability, and clear communication.

While technologies and risks will continue to evolve, our mission remains constant. Public pensions exist to protect retirement security, and that responsibility requires both innovation and a strong foundation in the principles that have guided our industry for decades.

At NCPERS, we continue to support public pension leaders by facilitating the exchange of knowledge and best practices. We encourage pension professionals to stay informed, learn from peers, and work diligently to ensure your organization is equipped with the skills needed to best serve plan participants in a rapidly changing environment.