Capita Penalized for Civil Service Pension Scheme Failures
Capita, the outsourcing giant, has faced financial penalties due to unacceptable service levels provided to members of the Civil Service Pension Scheme (CSPS). The Cabinet Office reported significant performance issues since Capita took over the administration of the CSPS, which serves about 1.7 million members, in December 2022.
Service Backlog Increases
Since the transition, Capita has accumulated a backlog of approximately 120,000 cases. This figure has surged from 86,000 at the start of December. Previously, Capita had estimated inheriting only 40,000 cases from the former administrator, MyCSP.
Government Response to Poor Performance
Government officials and civil service unions have labeled the situation as “unacceptable.” In response to these challenges, a taskforce was formed by the Cabinet Office to address the ongoing service problems. This team is led by Angela MacDonald, the second permanent secretary of HM Revenue and Customs, and includes 150 officials dedicated to improving service levels.
Financial Penalties for Capita
Cabinet Office minister Anna Turley confirmed that financial penalties were imposed on Capita due to its unsatisfactory performance in December, the first month of a £239 million CSPS contract. The exact amount of these penalties remains undisclosed, labeled commercially sensitive by the Cabinet Office.
Backlog Details and Impact
Among the backlog are 8,500 retired scheme members awaiting full pension benefits, alongside 6,300 cases concerning deceased members. Many of these cases require further action, such as benefits payouts for dependents. Capita claims that around 75% of the cases involving deceased members were inherited from MyCSP, suggesting about 1,500 were newly created since December.
- 8,500 retired members waiting for benefits.
- 6,300 cases related to deceased members.
- 3,400 cases involve upcoming voluntary exits.
Hardship Fund and Financial Support
In response to the backlog delays, the Cabinet Office and Capita have introduced a hardship fund. This initiative will offer interest-free loans of up to £10,000 to civil servants who retired in the last year without receiving pension payments. Departments and agencies will facilitate these loans.
Future Considerations for CSPS Administration
Concerns have been raised regarding Capita’s capability to manage the CSPS effectively. Sir Geoffrey Clifton-Brown, chair of the Public Accounts Committee (PAC), has sought clarity from the Cabinet Office on whether it is considering bringing the CSPS administration back in-house. Despite previous recommendations, the Cabinet Office has not publicly evaluated this option.
The ongoing issues with Capita’s administration of the CSPS highlight the crucial need for effective operational management and accountability in pension schemes. As the situation develops, stakeholders are keen to see how the government addresses these pressing concerns.
