CORRECTION: Civil service pensions: Report lays out successive govt failures in scheme administration

CORRECTION: The Public Accounts Committee's report and release have been updated to reflect the fact that the decision for the Government to go ahead with the contract award for the administration of the civil service pension scheme to Capita has not yet been confirmed – changes highlighted below.

- Plans to leave pension scheme members with unacceptable waits for remedy following McCloud judgment

- PAC calls on Cabinet Office to explain how it ensures contractors are committed to union recognition and to publish costs/benefits of bringing scheme in-house

The Cabinet Office has not shown that it is able to effectively manage the outsourced administration of the civil service pension scheme. In a report on the 1.7m-member scheme*, representing total future liabilities of £189bn, the Public Accounts Committee warns of the government's currently-limited ability to secure value for money in how the scheme is run.

The PAC report finds that more than half of members affected by historic discrimination** (see notes to editors) who are drawing their pension are facing unacceptable waits for this to be remedied. The Cabinet Office plans to reach all members by 2027 but has no plan or selected supplier yet to carry out the work to offer a remedy to c.70,000 people who have not yet heard from government on the issue. This means the government plans to leave some people waiting up to six years from the beginning of the programme to address the discrimination they had suffered before acting to resolve their cases.

The report highlights a failure by government to manage the contracted administrators of the scheme, with customer service levels for members unacceptable since at least 2023. The Cabinet Office has twice now overseen a fall in customer service levels during the transition from one supplier to another: current administrators MyCSP, and Capita, which is due to take over the £239m seven-year contract in December 2025. At the time of the PAC's report, there is a clear risk that Capita will not be ready to take over administration as planned.

The PAC notes that MyCSP staff who are members of the largest civil service union, PCS, came out on strike this year over the lack of union involvement in the transfer of staff to Capita. MyCSP does not recognise the union for collective bargaining. The Cabinet Office, as it is not the actual employer, can only advise and support where appropriate, while listing staff retention as a key risk in the transition. In order to ensure a smooth transition, the PAC is calling for appropriate consideration to be given to the rights of staff members transferring across to Capita.

In the wider picture, the government should explain how it will ensure that its contractors are committed to giving adequate recognition to the voice of employees - for example, through union recognition. The report also identifies the fact that the market for pension administrators bidding for this contract is small. This potentially limits the Cabinet Office's ability to secure value for money for the scheme through a competitive process to find its preferred supplier. The PAC asks that government set out its consideration of the benefits and costs of administering the scheme in-house.

Sir Geoffrey Clifton-Brown MP, Chair of the Public Accounts Committee, said: “It is deeply frustrating for this Committee to be scrutinising an issue that ought to be as seamlessly run as civil service pensions. Scheme members who have dedicated their careers to public service ought to be secure in the knowledge that it is under sound administration. For value for money to be in question in the administration of this scheme; for members to be kept waiting years for age-related discrimination within the scheme to be remedied; for the Cabinet Office to successively fail in its management of the contract for the scheme as it shuttles between suppliers – this is an indictment of a system that should be invisibly run for the benefit of public servants who deserve security following their retirement.

“Our report also provokes wider questions on whether the government is doing enough to ensure that suppliers receiving public money are doing enough to make sure the voices of employees are heard. There may be structural reasons for the lack of union recognition by MyCSP. However it will seem odd to many that the civil service pension scheme administrator did not recognise the civil service's largest union, and it is positive to hear that Capita have agreed to move towards recognition with PCS. Given the performance of the scheme in the past as it has shuttled back and forth between different administrators, and equivalent risks identified in the future by our Committee's report, it is time for the government to publicly take stock. The costs and benefits of bringing the scheme back in-house must now be laid out. Whatever route is taken in the future, the status quo has long clearly not been good enough.”

Notes to editors

*The civil service pension scheme is an unfunded defined benefit scheme. Unfunded schemes and the cash required to meet the payment of pension benefits are paid from public funds provided by Parliament. Members contribute on a ‘pay-as-you-go' basis. These contributions (and those made by employers) are credited to the Exchequer under arrangements governed by the Superannuation Act 1972 and regulations made under the Public Service Pensions Act 2013.

**The 2018 McCloud judgment found that reforms to public sector pensions discriminated against younger scheme members. Government moved to remedy this discrimination in 2021, with options to be offered to those impacted allowing a choice based on whether they would receive better benefits in their legacy scheme or in the reformed scheme.

PAC report conclusions and recommendations 

Since at least 2023, customer service levels have been unacceptable as MyCSP has struggled to retain sufficient staff numbers. Capita is planning to employ even fewer staff. MyCSP's core staffing level peaked in October 2023 before declining from then to January 2025 by 11%. Contact centre performance has deteriorated over the same period. For example, only 8% of calls were answered within 30 seconds in January 2025, down from 43% in July 2023. The expected service level is that at least 80% of calls should be answered within 30 seconds, but the average waiting time in November 2024 was 24 minutes. MyCSP says that it has recently increased staff numbers and contact centre performance is improving as a result. It is estimated, however, that it takes up to six months to fully train staff to deal with the most complicated pension cases. Capita has profiled its expected resourcing levels for when it takes over and in year one expects to need 332 staff, 33 fewer than MyCSP's core staff level for January 2025. Capita's estimated resourcing levels assume that more automation and increased functionality of its IT system will require fewer staff. However, in the lead up to the transition, Capita has missed milestones for delivering the IT infrastructure and has agreed with the Cabinet Office to produce a simplified IT solution on 1 December 2025 to derisk delivery.

Recommendation 1. The Cabinet Office should explain in its Treasury Minute response how it has assured itself that there will be sufficient resources available to administer the scheme from 1 December 2025 if:

1. a)the promised transition to Capita's IT platform occurs as planned; and
2. b)if that transition does not occur as planned.

More than half of members who are drawing their pension and affected by Remedy are facing unacceptable waits until as late as 2027 to have their pension options set out for them. Applying remedies to members requires MyCSP to send Remedial Service Statements (RSSs) to affected members, presenting them with their two pensions options. As of 26 March 2025, MyCSP had issued RSSs for 58,000 members who are drawing their pension (44% of those affected), above the target of 43% that the Cabinet Office set. Data from July 2025 shows that there are still 53% of affected members who are currently drawing their pension, who are yet to receive their RSSs and have their choices processed. The Cabinet Office has stated that it is aiming to reach all members by 2027 but does not yet have a plan to deal with the remaining members and has not chosen a supplier to carry out the work. As the Remedy programme started in 2021, this means the Cabinet Office is planning on leaving some members waiting for up to six years before receiving the information they need about their pension entitlement.

Recommendation 2. The Cabinet Office should set out in its Treasury Minute response its plan for dealing with the remaining members who are drawing their pension and affected by Remedy. That plan should include how it intends to communicate to members when they can expect to receive information allowing them to make their choices.

The Cabinet Office has not demonstrated it has sufficient capacity and capability to manage the MyCSP contract effectively and has now failed on two occasions to adequately manage the transition from one supplier to another. The Cabinet Office accepts that the terms of the contract with MyCSP does not enable it to hold MyCSP to account for its performance, despite having made multiple changes to the contract over its lifetime. For example, despite MyCSP's mixed performance record, the Cabinet Office has only successfully applied two fines of total value of around £260,000 over the course of the contract, against a total contract value of around £238m. Additionally, this is the second time the Public Accounts Committee has seen the Cabinet Office fail to manage the successful transition from one administrator of the Scheme  to another without a drop in performance levels during that period. MyCSP's poor customer service record over the last two years mirrors the same drop off that Capita was responsible for when it was handing elements of the Scheme administration over to MyCSP in 2014.

Recommendation 3. The Cabinet Office should set out in its Treasury Minute response:

1. a)how it intends to ensure that it has appropriate commercial capacity and contract management skills such that it can hold the administrator to account; and
2. b)what measures it intends to put in place to ensure adequate customer service from suppliers in the transition period between contracts.

In order to ensure a smooth transition from MyCSP to Capita it is important that appropriate consideration is given to the rights of staff members transferring across. MyCSP staff who are members of the PCS union have been on strike over the summer in protest at the lack of PCS involvement in Transfer of Undertakings (Protection of Employment) (TUPE) negotiations. MyCSP told us that the PCS union is not recognised by MyCSP for collective bargaining or otherwise, which it states is due to MyCSP being a part-mutual organisation with an elected, formal employee works council which is involved in negotiating terms, conditions and pay. It did, however, state that there were ongoing discussions between itself, Capita, the Cabinet Office and PCS about this issue. The Cabinet Office acknowledged these discussions too, while claiming that given it was not the actual employer it could merely advise and support where appropriate. It does however list staff retention as a key risk to be managed as part of the transition and identified staff shortages as being partly responsible for performance failures in 2024 and the decline in contact centre response times.

Recommendation 4. The Cabinet Office should set out in its Treasury Minute response what its approach is to ensure that suppliers that it contracts with are committed to giving adequate recognition to the voice of employees, for example, through union recognition.

There is a clear risk that Capita will not be ready to take over administration of the Scheme as planned on 1 December 2025. The planned date of transfer of administration from MyCSP to Capita is 1 December 2025. However, of the eight transition milestones which have so far passed, only one has passed with all elements delivered on time. The Cabinet Office has stated that the delays are due to Capita underestimating both the complexity of the transition and the time required to implement the technology. The Cabinet Office has also stated that in the worst-case scenario it plans to continue with MyCSP's existing systems, however currently there is no agreement with MyCSP to keep its digital systems in place. The Cabinet Office told us that it was undergoing a reset plan over the summer with the intention of then making a "go/no-go" decision in September on whether to continue or not with the transition as planned. The decision to go ahead with the contract award has not yet been confirmed. 

Recommendation 5.

2025. a)The Cabinet Office needs to fully develop contingency plans should Capita be unable to take over the administration on 1 December 2025.
2026. b)The Cabinet Office should write to the Committee with an update on the transition plansimmediately following the decision on whether to go ahead with the transition.

There has been a small market of pension administrators bidding for the contract, potentially limiting the Cabinet Office's ability to secure value for money for the scheme administration. Capita administered only some elements of the pension scheme before MyCSP took over the contract in 2014 to administer the whole scheme. Capita is now taking on the responsibility for administering the scheme in full from MyCSP. The Cabinet Office says that the market of pension providers is quite small, undermining its scope to encourage competitive procurements and obtain value for money for the taxpayer. In light of the small market of pension providers and need across government to apply the McCloud remedy across several pension schemes, the Cabinet Office stated that it is currently reviewing the market to understand how to encourage new entrants and ensure market resilience. It also told us that when looking to procure any significant contract like this, there would also be consideration given to the costs and benefits of delivering the service in-house.

Recommendation 6. The Cabinet Office should set out in its Treasury Minute response its overall commercial strategy for pension administration including consideration of the benefits and costs of administering the scheme in-house.