Capita has issued an apology following widespread criticism from a government minister and members of Parliament over its mismanagement of the civil service pension scheme. The outsourcing firm has been condemned for "dreadful" failures that have left pensioners and bereaved families facing months of hardship without essential income.
Paymaster General Nick Thomas-Symonds informed the House of Commons that Capita has not met its promise to resolve the issues by June 30, with a backlog of nearly 11,000 cases still outstanding. This backlog includes approximately 4,100 bereavement cases, which Thomas-Symonds described as the "most harrowing stories, affecting devastated scheme members and grieving families."
Capita, which assumed responsibility for the civil service pension scheme from previous administrator MyCSP in December, acknowledged that its service has not been adequate, particularly for those awaiting bereavement, retirement, and quotation cases. "We are sorry for the distress and inconvenience experienced by those members," the company stated. Capita added that it now has the necessary processes, automation, and technology in place to address the backlog and is assessing the implications of the Paymaster General's statement.
Shares in Capita experienced a 10 percent drop, falling to 290p, following the news.
Unforeseen Hardship and Inherited Backlog
Reports have highlighted numerous cases of individuals affected by the delays. Former prison officer Jason Gould faced difficulties in his retirement plans due to rent arrears and inability to pay off debts. Teresa Cook, a bereaved mother, was unable to settle the financial affairs of her late daughter, who had been a civil servant for over two decades.
Capita indicated that it inherited a significant backlog of cases from MyCSP when it took over the administration of the scheme. However, Thomas-Symonds stated that Capita was awarded the contract in November 2023 and had two years to prepare for the transition. He noted that senior leadership had given personal assurances of their readiness to manage the workload and achieve a successful transition, with promises of technological improvements including AI integration. "It is clear that non-delivery of technology has been a fundamental part of Capita's inability to deliver," Thomas-Symonds said, adding that the company was "completely unprepared and its system was overwhelmed, which resulted in a backlog that skyrocketed to a staggering 120,000 unresolved cases."
Capita missed an end-of-April target to clear inherited arrears and a subsequent end-of-June milestone for returning to standard service levels. Thomas-Symonds emphasized that progress achieved so far is thanks to a significant effort by the Cabinet Office pensions recovery taskforce and a team of over 140 officials. He also announced that "immediate financial consequences" would be imposed, with Capita's bottom line already impacted by £9.9 million in withheld payments. "Public money will not fund Capita's failings. We will recover every single penny of these surge costs directly from Capita," he asserted.
Parliamentary Response and Support Measures
Conservative Shadow Minister Mike Wood expressed concern over the anxiety and hardship faced by retired public servants and grieving families, describing the situation as an "operational collapse" leading to "severe financial distress."
In response to the difficulties, the government confirmed that interest-free "hardship loans" of up to £10,000 will be offered to thousands of individuals experiencing financial hardship due to the pension scheme's failures. The Paymaster General is scheduled to appear at a joint session of the public accounts committee and the public administration and constitutional affairs committee, where further discussions are expected regarding the ongoing situation.