Capita is scheduled to take over the Civil Service Pension Scheme in September. The union announced at the start of this month that members are planning a further six-week walkout. This adds to the industrial action that began in July, highlighting deep-seated tensions regarding the transfer of responsibility for millions of pensioners‘ records.
The union is demanding that staff administering the scheme be brought back in-house. This follows a report from the National Audit Office that criticized the current arrangement.
Fran Heathcote, the union’s general secretary, said the outsourcing has been a failure. She added that there is a risk of collapse jeopardizing the handling of the pensions of around 1.7 million scheme members.
Heathcote described the situation for the Cabinet Office as dire. The government is stuck between a provider it allegedly did not think was good enough to continue with the contract and a new contractor that has admitted it has bitten off more than it can chew.
The union chief called for the staff to be brought under direct Cabinet Office control as civil servants. This creates a precarious operational vacuum where the government relies on a provider it deems unsuitable while the new contractor struggles to demonstrate readiness.
The risk of service disruption increases significantly when the outgoing team is on strike and the incoming team is already missing key contractual milestones, potentially leaving millions of people in limbo regarding their benefits.
The NAO’s report, published in June, scrutinized the financial health and operational efficiency of the current arrangement. It found that complaints against MyCSP had increased by 43% between 2016-17 and 2024-25 to a high of 4,780 in the most recent financial year.
This data suggests a growing dissatisfaction among the scheme members relying on the service. Despite having made good progress on implementing changes related to the McCloud judgement, which aims to restore lost pension benefits, the NAO said MyCSP’s contact centre performance had been below expected levels for at least the last two years.
MyCSP’s poor performance has not resulted in any contractual penalties. This lack of accountability appears to be a contributing factor to the escalating number of complaints received by the administration provider.
Regarding the transition to Capita, the NAO’s report expressed concerns that the new provider had already missed three key milestones as it prepares to take over. Consequently, the Cabinet Office has withheld £9.6m in payments.
Capita now expects the full service to be online by March 2026, a delay that raises concerns about the timeline for the handover.
Savings were promised, but management is unclear. The Cabinet Office must handle this difficult situation to ensure a smooth transition and prevent further disruptions to the pension scheme.
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