More than 700,000 pensioners could have their pension payments interrupted by a failing takeover, a trade union has warned. Civil servants have been left in limbo due to a failing £239m Government contract as the consultancy firm Capita is planning to assume control of the Civil Service pension scheme. Originally, the takeover was supposed to happen in December, but the Cabinet Office has confirmed that the takeover date remains in limbo with less than five weeks to go. The consultancy was stripped of the same 10-year contract just over a decade ago, The Telegraph has reported.
Capita previously managed the Civil Service Pension Scheme until 2012, when administration was taken over by MyCSP. The company regained the contract in November 2023, signing a new ten-year deal worth £239 million. Under the agreement, Capita is responsible for sending approximately £8 billion a year to 730,000 pensioners and handling £7 billion in incoming contributions from 1 December. Due to significant issues that arised during the transfer, Public and Commercial Services Union (PCS) said that pension payments and redundancy settlements could be dealyed, indicating a “clear risk” that Capita was not ready to go ahead with the £8bn-a-year scheme.
The Cabinet Office has yet to confirm whether the transfer will still go ahead on December 1, following a troubled two-year transition that was meant to ensure a smooth handover. Despite the looming deadline, officials say approval for the transfer is still pending.
Earlier, the firm was fined £14 million due to a data breach. It was also axed from the contract to run the Teacher’ Pensions Scheme following administrative failures that potentially reduced some teachers’ retirement funds by tens of thousands of pounds.
PCS general secretary Fran Heathcote warned of “major potential issues” the delay could cause, including disruptions to existing pension payments, delays for new retirees awaiting their first payments, and complications with processing redundancy and exit settlements.
“We resolutely believe that the only safe option for a pension scheme covering 1.7 million scheme members is to bring the physical administration of the work back in-house, under direct ministerial control,” Ms Heathcote stated.
The Public Accounts Committee found that, although MyCSP’s service standards have been poor since 2023 due to understaffing, Capita plans to operate with an even smaller workforce.
A Capita spokesperson disputed recent assessments, stating: “This report presents a snapshot from several months ago and is not reflective of the current status of the transition.”
