Pensions Crisis Update

More Missed Deadlines as Capita's Pensions Failure Continues To Hit Vulnerable Scheme Members And Their Families

This is the eighteenth briefing since our conference in May, dedicated to the catastrophic failure of the Civil Service Pensions administration contract. These briefings have reported on our meetings with the Scheme Management team in the Cabinet Office, and each week we confront the dire consequences for scheme members of Capita’s inability to achieve even basic levels of service. 

This week I want to deal with two particularly appalling examples: 

1. The possible impact of Capita's failures

PCS understands that some death benefit lump sum payments may become subject to tax if it takes more than two-years to be paid; and the Capita crisis may push some bereaved families into that position. I am deeply concerned that the latest figures show 1,340 bereavement and death-in-service cases are being recorded by Capita as ‘non-workable’. While we would not suggest that all of these cases will be affected by the two-year tax rule, there is clearly an unacceptable risk. We have serious questions about how long these cases are being stockpiled and why they have been labelled ‘non-workable'. 

2. The McCloud deadline will not be met

This is also the week in which the Cabinet Office confirmed that the Scheme will not meet the deadline of 31 March 2027 to complete the remediation of pensions, already in payment, which are affected by the McCloud Judgement. This is despite the Scheme administrators being allowed an additional two-year extension to the original target in 2025. 

In 2018 the Court found that changes to public service pension schemes made in 2015 had unlawfully discriminated against younger scheme members. As a result, legislation passed in 2022 meant that the government is required to provide a remedy, allowing affected members who are already receiving pension benefits, to make choices about their service between 2022 and 2025, which are offered to active members at the point they retire, and which could change their rate of pension. 

Work on this started in 2024 but was suspended in 2025 because of the transition to Capita. PCS understands that Capita have been allowed to claim that the work to complete this legislative requirement is additional to work covered by their £239 million contract and that subsequent negotiations have taken months to conclude. Of the 130,000 members entitled to this choice, only 56,000 were contacted by the previous scheme administrator meaning there are up to 74,000 retired members and around 20,000 deferred members still to receive recalculations. This week we were told that the work is still “at the design stage” 

Ministerial Statement

The overall responsibility for delivery of the scheme’s administrative operations ultimately lies with the Scheme Manager: The Cabinet Office; and PCS has demanded that the government takes the radical measures necessary to end the Capita crisis. 

Whilst the government has not openly rejected the option of exercising the clause in the contract allowing them to terminate end the contract on the grounds of “catastrophic failure”, they are currently hoping that a number of new controls will ensure that Capita achieves a recovery of service, specifically: 

• A detailed recovery plan with assurance of deliverability provided by consultants Grant Thornton 

• Tighter audit controls of Capita’s operations 

• A further statement on the improvements the government has demanded of Capita and the sanctions it has applied under the contract. 

PCS do not believe that this is sufficient to restore the service to an acceptable level; and that Capita’s continued failure clearly shows that it is time to reassert direct control. This will be my message to Cabinet Office Ministers, as they prepare their statement to Parliament, scheduled for later in October. 

Annual Benefit Statements

In the public service pensions the Annual Benefit Statement (ABS) is due each year by 31st August. In recent years this has been interrupted in the civil service scheme; first due to the impact of the 2022 legislation and more recently by the change of administrator. This year the 2025/26 ABS were promised to be issued at the right time. During August we were informed that Capita would need until the end of September, but over 50,000 statements have still not been issued. We understand that most will be issued during the coming week but that will still leave around 4,000 complex cases which won’t be issued. 

Advice and actions for members

• Complaints about ABS either non-receipt or incorrect information should be made via Contact Us and complaints procedure

• The IDR process is the route to compensation for distress and inconvenience 

• Retiring members should join PCS ARMs

• Ask your MP to demand the Synergy payroll and HR contract is paused and to call for the physical administration of the Pension Scheme to be brought back into the Civil Service 

• Email editor@pcs.org.uk with stories about the effect of all this on the lives of our members.

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