Civil Servants: Workplace Pensions

The issues and delays facing a number of civil servants and pension scheme members in receiving their pension quotes are unacceptable. I want to reassure you that this Government has taken firm action to help put things right as soon as possible. We have agreed a clear recovery plan with Capita, which includes specific milestones and accountability targets for delivery. For priority cases, we have deployed additional resources and improved communication with affected colleagues, so that staff, both former and serving, receive the quality of service and support they deserve.

Existing Key Performance Indicators (KPIs) have been enhanced and strengthened to deliver improved performance and higher penalties for failure, including financial penalties. These have already applied in respect to Capita's performance falling short of expected standards and delays in administering the Civil Service Pension Scheme.

Capita were instructed to prioritise and clear the most urgent cases such as Death in Service and Ill-Health during February and March. While Capita previously assured us that performance standards for Death in Service and Ill-Health were being met by mid-March, recent information continues to demonstrate unacceptable delays in some ill-health retirement and death-in-service cases. We have urgently escalated this to Capita, who are actively investigating the underlying data and reasons for these continued delays.

Capita has made lump sum payments to 14,880 members, the majority of whom have retired but are not yet receiving their pension.

To provide immediate financial support to those who may need it, including those who have left under the compensation scheme, arrangements are in place for interest-free bridging loans of £5,000 and up to £20,000 in exceptional cases - to most recent retirees facing payment delays. This is alongside interim lump sum payments being made to provide immediate funds to retiring members. The pension scheme continues to make monthly pension payments to approximately 730,000 existing pensioner members on time.

Interest will be paid on delayed benefits to avoid financial loss by members. In addition, the existing statutory complaints process evaluates claims for financial losses, as well as distress and inconvenience caused, on a case-by-case basis to determine whether compensation is due. This ensures that any retiree who provides evidence of extra costs, such as bank penalties or interest charges caused by the delay, is fairly assessed. This process is run in accordance with the standards set by the Pensions Ombudsman.

We have currently withheld transition milestone payments for work that has not been completed to the required standard. These payments will remain withheld until the milestones are fully delivered.

The Cabinet Office will continue to use all available commercial levers to hold Capita to account and ensure they deliver the contractual service levels.

While the specific financial values of commercial transactions remain commercially confidential, I am unable to disclose the figure, but I can confirm the Cabinet Office has withheld significant transition milestone payments due to missed deliverables.

The Cabinet Office has mandated Capita that they must restore service levels by the end of June 2026. We are using every commercial lever at our disposal, including withholding payments for deliverables that have not been met. We also reserve the right to take further formal action to ensure the service returns to the required standards.

Regarding your concerns on government contracts, Capita is a strategic supplier to the government and provides many public services; they have more than 80 contracts across the public sector. Where performance does not meet required standards, departments can take action in accordance with the terms of the relevant contract which may include rectification plans, the application of financial penalties, or, where appropriate, the exercise of termination rights.

The government monitors Capita's performance across this portfolio of contracts; it recognises that the situation with regard to pensions is an exception, and an unacceptable one, and is working hard to resolve it.

Regular updates on the work to recover the service, continue to be posted on the Civil Service Pensions member portal and on Gov.Uk.