Capita loses RMSPS contract renewal
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The government has stepped back from renewing Capita’s contract to administer the Royal Mail Statutory Pension Scheme, citing a failure to meet key milestones. Several MPs on Wednesday urged the government to also end the firm’s contract for the troubled Civil Service Pension Scheme and set up an in-house administration team.
Capita finds itself under fire once again over its pension scheme administration, having experienced issues with Teachers’ Pensions and the Civil Service Pension Scheme, as well as becoming victim of a hack in 2023 that affected over 300 pension schemes.
Paymaster general and minister for the Cabinet Office Nick Thomas-Symonds said on Wednesday that the new contract with Capita for the RMSPS has been “terminated”. About two years ago, just before the general election, the administrator’s contract was renewed for six years from 2026.
The minister did not say what will happen with the administration of the RMSPS, only that the government will look at “a range of options”, despite calls from several MPs to bring public service pensions administration in-house.
A spokesperson for Capita said: “Capita has administered the Royal Mail Statutory Pension Scheme since 2018, and we will continue to support its 337,000 members during the transition period, working closely with the Cabinet Office to ensure continuity of service for members.”
The minister did not say what will happen with the administration of the RMSPS, only that the government will look at “a range of options”, despite calls from several MPs to bring public service pensions administration in-house.
A spokesperson for Capita said: “Capita has administered the Royal Mail Statutory Pension Scheme since 2018, and we will continue to support its 337,000 members during the transition period, working closely with the Cabinet Office to ensure continuity of service for members.”
For the troubled Civil Service Pension Scheme – where payment delays, portal access issues and a data breach have affected thousands of former and current civil servants sometimes causing hardship – Capita has now been given a deadline of the end of June to restore normal service, while all arrears must be cleared by the end of this month.
Thomas-Symonds said milestone payments are withheld where deliverables are not met, but when pressed by MPs if the contract for the CSPS administration will be terminated, he said it was a long-term contract.
A spokesperson for the Cabinet Office, which looks after CSPS, said: “The service levels following the move to Capita have been unacceptable. An urgent recovery plan is underway, and our immediate priority is to stabilise the service and give current and former Civil Servants the service they deserve. The Cabinet Office will continue to use all available commercial levers to hold Capita to account and ensure they deliver for both members and taxpayers.”
A spokesperson for the Cabinet Office, which looks after CSPS, said: “The service levels following the move to Capita have been unacceptable. An urgent recovery plan is underway, and our immediate priority is to stabilise the service and give current and former Civil Servants the service they deserve. The Cabinet Office will continue to use all available commercial levers to hold Capita to account and ensure they deliver for both members and taxpayers.”
The Capita spokesperson said: “We are very sorry for the serious issues that have been raised regarding our performance on the Civil Service Pension Scheme and the impact on its 1.7m members. We recognise the distress this has caused and the strength of feeling being expressed. We take full responsibility for addressing these issues. Our focus is on ensuring members receive the service they expect and deserve, and on putting things right as quickly as possible.”
The Public and Commercial Services Union is now calling for the Labour government to make good on its pre-election promise to deliver the “biggest wave of insourcing in a generation”.
The Public and Commercial Services Union is now calling for the Labour government to make good on its pre-election promise to deliver the “biggest wave of insourcing in a generation”.
General secretary Fran Heathcote said: “The decision to terminate Capita’s role in the Royal Mail pension scheme sends a clear message, which is: this can be done. When a contractor fails, contracts can and should be ended. The same must apply to the civil service pension scheme.”
She said it was “simply unacceptable that this is allowed to continue when a clear alternative exists in bringing civil service pensions back in-house. The government must now act with urgency, end Capita’s contract, and prevent further failure.”
The government said last month that it will introduce a public interest test for all departments, meaning they will have to assess whether contracts worth more than £1m can be delivered more effectively in-house, and explain why if they cannot. Departments will be required to publish insourcing strategies.
The government said last month that it will introduce a public interest test for all departments, meaning they will have to assess whether contracts worth more than £1m can be delivered more effectively in-house, and explain why if they cannot. Departments will be required to publish insourcing strategies.
At Capita, a surge team has been put in place to help clear a huge backlog, which the firm has blamed on its predecessor MyCSP – allegations MyCSP disputes. The surge team has helped to clear 15,000 unopened emails and reduced telephone waiting times from 90 minutes to less than 2 minutes, according to the minister.
However, some MPs questioned why taxpayers should fund the resources needed to remedy administration failures. Thomas-Symonds said Capita has offered to carry the cost, but Labour MP John McDonnell argued that this should be an obligation, not an offer.
