Pensions Crisis Update

Ministerial Statement and PCS Meeting with Minister

Summary

On 26 October 2026, Cabinet Office Minister Sally Jameson delivered a highly critical assessment of Capita’s performance in administering the Civil Service Pension Scheme, acknowledging significant and ongoing failures in service delivery.

While the government outlined plans for further intervention and oversight, and multiple references were made regarding “the greatest wave of insourcing,” substantial concerns remain regarding a lack of Capita’s accountability, transparency, costs to the public purse, and any timetable or even likelihood for improvement.

The following day, PCS and members of the PCS Parliamentary Group, met with the Minister to discuss issues raised in her statement, and explicitly set out our proposals to restore the scheme administration proposals to an acceptable standard.

Government Assessment of Capita's Performance

In the Minister’s statement, Sally Jameson made clear that Capita has “comprehensively failed” and described progress in addressing known problems as “abysmal.”

She referred to findings from an Independent Adviser’s report, which concluded that remedial action taken to date has been “inadequate;” adding that in response, the Cabinet Office will develop a new improvement plan based on the report’s recommendations.

Although neither the Independent Adviser’s report nor the accompanying government report will be published or provided to Parliament in full, copies will be made available to the Public Accounts Committee (PAC) and the Public Administration and Constitutional Affairs Committee (PACAC) on an in camera basis. The Minister indicated she would consider releasing a redacted or abbreviated version for wider scrutiny.

An update on progress with administration of the ‘McCloud Remedy’ is expected in November 2026, but the Minister confirmed the Cabinet Office statement that the March 2027 deadline would not be met. No alternative deadline has been proposed.

Further Government Intervention

The Minister announced that a new group of experts will be appointed to support delivery of the recovery programme.

From a trade union perspective, this raises questions about:

• The likely deployment of additional civil servants to bail-out Capita.

• The continuing transfer of public resources to sustain a failing outsourced contract.

• The ultimate cost of government intervention, which remains unclear.

Financial Implications

Throughout the statement, the Minister highlighted that:

• £10 million has been withheld from Capita.

• Capita has accepted a voluntary 10% reduction in contractual payments while service levels remain unacceptable.

However, several issues remain significant:

• Parliamentary Questions have established that approximately £19 million has already been paid to Capita.

• Select Committees have previously been informed that the Cabinet Office expects to spend £12.5 million on direct Civil Service support by the end of the current financial year.

• It is unlikely the cost of the newly announced expert support team is included within this £12.5 million figure.

These figures suggest that substantial public expenditure will continue, despite acknowledged failures in contract performance.

Future of the Contract and Insourcing

The Minister stated that the government’s longer-term strategy involves “Restoring operational resilience, including considering insourcing models.” However, no clear timescale was provided for what constitutes the “longer term.”

This raises several concerns:

• The government is still relying on the deployment of more than 180 civil servants to support contract delivery, with more to come.

• Anything remotely resembling this level of intervention cannot be sustained for the remaining six years of the contract.

• No firm commitment was made regarding a transition to public-sector delivery.

The Minister also repeatedly referenced the government's commitment to delivering “the greatest wave of insourcing in a generation” but that “you cannot replace a complex operation overnight.”

PCS has consistently recognised that a complex pensions operation cannot be brought back in-house overnight. However, the union's position remains that immediate insourcing of the physical administration would provide direct Ministerial control over:

• Staffing levels.

• Recruitment.

• Workforce planning.

• Training provision.

Confidence in Recovery Plans

The Minister faced repeated questioning about why she believes Capita will succeed in meeting new targets after repeatedly failing to meet previous commitments. In response, the Minister argued that:

• A “better quality remedial plan” is now in place.

• The Cabinet Office has access to all performance data needed to monitor progress.

However, when pressed on:

• How long Capita will have to implement improvements; and

• The criteria by which success would be judged.

the Minister declined to provide a deadline, stating “I don’t want to put a deadline on it today.” This contrasted with a later statement that “We’ll know in the coming weeks.”

Consequently, the absence of measurable targets or any publicly defined milestones remains a significant concern.

Accountability Measures

The Minister stated that “If Capita’s performance is not up to scratch, I will return to the House.”

While this provides a degree of ministerial accountability, no specific performance thresholds were identified that would trigger further action.

The Minister also confirmed that the Cabinet Office has developed contingency plans should the government decide to terminate the contract. However, she did not disclose any details of those plans.

PCS need to continue pressing for greater transparency regarding:

• Alternative service delivery arrangements.

• Workforce implications.

• The feasibility and timeline of contract termination, if matters deteriorate further.

Procurement Act and Future Government Contracts

Several MPs questioned whether Capita could face exclusion from future public contracts under provisions contained within the new Procurement Act.

The Minister declined to discuss any potential action against Capita for legal and commercial reasons. Nevertheless, she confirmed that debarment from future contracts is an option available under current legislation.

Questions were also raised regarding Capita’s involvement in the ‘Synergy Programme.’ The Minister responded that Synergy falls under the responsibility of the Department for Work and Pensions (DWP) rather than the Cabinet Office; but stated she was confident that DWP officials were “aware of the issues” surrounding Capita’s current performance.

Concerns Raised by the Public Accounts Committee Chair

The Chair of the Public Accounts Committee (PAC) highlighted that deadlines previously promised by Capita at four separate PAC hearings had all been missed.

The Chair also raised concerns about the two-year tax deadline affecting pension remedial work raising the possibility that pensioners might incur financial losses or penalties because of Capita’s administrative delays.

Specifically, the Chair asked whether:

• Capita would compensate affected pensioners; or

• The law would be changed to prevent financial losses arising from delays.

The Minister replied that the number of potentially affected cases remains low at present but stated that government action would be considered should those numbers increase.

Monitoring Arrangements

In response to ongoing concerns about Capita’s ability to deliver improvements, the Minister confirmed that progress against the recovery programme will be monitored on a fortnightly basis by the Cabinet Office.

PCS Meeting with the Minister

PCS and members of our Parliamentary Group held a constructive meeting with the Minister in her Whitehall office on 27 October 2026.

In the meeting we reminded the Minister that prior to the privatisation in 2012, resulting in the handing of the entire pension administration and payment system to a single private sector provider, the Civil Service Pension Scheme was successfully administered from within the Civil Service. We argued that returning the physical administration to Ministerial control, including the staffing levels and - critically - the training of those staff, would expedite resolving the current crisis and offer the best level of resilience going forward.

Following a discussion regarding contracts, we agreed to provide the Minister with details of a previously successful insourcing exercise, where a private company had been contracted to undertake Civil Service work, but management and unions were able to promptly apply Transfer of Undertakings legislation (TUPE) to bring the work back in-house.

Key Issues for PCS

PCS will want to focus on the following areas:

1. Member protection 

Challenging risks to pension scheme members, particularly around delays, tax liabilities, compensation arrangements, and delivery of the McCloud Remedy.

2. Transparency

Continued pressure for publication of the Independent Adviser’s findings and recovery plans.

3. Public Cost

Scrutiny of the growing expenditure on Civil Service expertise required to bail-out Capita.

4. Insourcing

Providing the agreed evidence regarding the viability of insourcing; along with seeking clarity on the government’s timetable and intentions, regarding bringing administrative services back in-house.

5. Workforce Implications

Ensuring that staffing, training, along with retaining and developing operational expertise, are central to any recovery or transition plan.

6. Contingency Planning

Pressing for greater disclosure regarding government plans should full contract termination become necessary.

Overall Assessment

The Ministerial Statement represents one of the strongest ministerial criticisms of Capita to date. However, while the government has acknowledged serious failures; it has announced further intervention at public expense, and it has yet to provide clear deadlines, transparent performance measures, or a definitive plan for insourcing. As a result, significant uncertainty remains regarding both the future of the contract and the protection of Civil Service Pension Scheme members affected by the continuing service failures.

However, PCS know that we can demonstrate to the Minister, the viability of bringing the physical administration of the scheme back into the Civil Service. We’ve made clear to the Minister that, in the face of that viability, if the government were to insist on leaving the work in the hands of a company so obviously incapable of delivering it, then it will be the government that will be recognised as responsible for the continuing failure of the administration of the scheme.

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