One wrong answer. A £17,500 tax bill.

The mortgage redemption statement lies on the kitchen table, next to a mug of tea that went cold an hour ago. Last month you took £25,000 tax-free from your pension to clear the mortgage. You haven't sent the money. You've changed your mind, and you'd rather it went back where it came from.

So you pick up your phone and type the question “Can I pay it back into my pension?”

Four seconds later, the answer arrives. Yes, with some limits to consider. Neat paragraphs. A friendly line offering to help with anything else. It reads like someone who knows.

It leaves out HMRC's pension recycling rules. If HMRC decides the payment was planned, it can treat the £25,000 as an unauthorised payment and tax it at up to 70%. That's a bill of up to £17,500.

Researchers put this question to a free chatbot this summer. That was its answer.

What the research found

Saturn Fintech builds AI tools for financial advice firms. In July it ran 121 money questions to 17 versions of five popular AI chatbots, asking each question five times. A financial specialist with 17 years' experience set the pass criteria for every question: exact figures, rules, deadlines and warnings. An answer had to meet all of them to pass.

On average, the chatbots gave wrong or incomplete answers 57% of the time. The best performer, a paid chatbot, failed 39% of the time.

The wrong answers sounded as confident, fluent and specific as the right ones. Nothing in the tone told you which was which.

Your questions are the hard ones

The hardest questions involved several rules acting on the same numbers: tax, pensions and inheritance at once. On those, the chatbots failed 88% of the time.

Retirement asks those questions. How much to draw, from which pot, in what order. What that does to your tax bill this year and your estate later. Each answer changes the next.

One test question came from someone aged 60, with £400,000 in pensions and £50,000 in savings, spending £28,000 a year. Could they afford to retire next year? The chatbot said they probably could. It didn't ask whether they'd checked their State Pension forecast. It gave a verdict on a life decision from four numbers.

The questions come back, too. Markets move, tax rules change, health changes. Standard Life's 2025 research found 12% of retirees wish they'd had a better grasp of how to turn pension savings into an income, and 12% regret spending too much too early. Its retirement savings director, Mike Ambery, says retirement isn't a one-off decision.

A chatbot answers the question you type today. The recycling rule was a question you didn't know to ask.

Who stands behind the answer

Suppose the answer is wrong. What happens next depends on who gave it.

The FCA does not regulate general-purpose chatbots. Its research this summer, with investors aged 18 to 40, found 44% believe AI financial information is regulated. A third think they could claim compensation if AI answer went wrong. They couldn't.

Pembroke is authorised and regulated. Your advisor's recommendation comes in writing, with the reasons set out. If things go wrong, you can complain to us, and then to the Financial Ombudsman Service. If an authorised and regulated firm fails, the Financial Services Compensation Scheme may be able to step in.

A chatbot offers none of this. When it's wrong, you carry the cost alone.

The rule that hasn't happened yet

From April 2027, unused pension funds will count towards your estate for inheritance tax.

One of Saturn's test cases shows the stakes. A 65-year-old with a £2.5 million estate, including a £1 million home, plus a pension. Saturn's paraplanner put the inheritance tax bill at £120,000 under today's rules and £700,000 after April 2027. The chatbot said £870,000 and £1.35 million, and assumed he was single without asking.

A plan built on today's rules can be out by hundreds of thousands of pounds from April 2027.

Where AI helps

Use it. AI is good at explaining jargon, building a budget and working out what to ask. The FCA says the same. Sarah Coles, head of personal finance at AJ Bell, told the FT chatbots can show you where you're overspending. She also described advisors getting in touch after clients acted on baffling suggestions from AI.

Advice brings judgement that connects one answer to the next, and a name that stands behind them.

Try this

Advice costs money. We won't pretend otherwise. Of UK adults who paid for financial advice in the last two years, 91% found it helpful.

Ask a chatbot what the April 2027 changes mean for your pension. Then ask your advisor. Compare the answers. Then compare who will answer for them if they turn out to be wrong.

If you're thinking about managing your money yourself, book a conversation with your advisor first. Bring the chatbot's answers with you.

–

This article is for information only and does not constitute financial advice. The value of investments can fall as well as rise, and you may get back less than you invest. Tax treatment depends on individual circumstances and may change.

Sources
Saturn, "Artificial Authority: Should you trust AI to deliver financial advice?", 2026 (research conducted 6 to 30 July 2026)
Financial Times, "AI chatbots give wrong answers to financial queries 'most of the time'", 19 September 2026
Financial Conduct Authority, "Young investors trust AI more than TV or celebrities", 27 August 2026
Standard Life, "What I wish I'd known", 27 May 2026 (Retirement Voice 2025, Ipsos)
The Advice Gap 2025, The Lang Cat