Pensions Crisis Update

Civil Service Pensions Crisis Update

On July 6 Nick Thomas-Symonds, Paymaster General, updated MPs on Capita’s mishandling of civil service pensions. He set out Capita’s failure to meet their own contractual obligations and deadlines, leading to ongoing misery for scheme members.

I reported in on 27 July that progress on sorting out the pensions debacle has been extremely slow. As the Minister pointed out, any progress is, to a large extent, down to the Cabinet Office Recovery Taskforce, which still has 140 HMRC staff deployed.

In addition to deploying civil service staff to get Capita out of their own mess, the Cabinet Office instructed Capita to appoint an external remedial advisor as a consultant to work on their plan. Grant Thornton, a global professional services network has now been appointed. Together with a team of auditors, they will be scrutinising every aspect of Capita’s remediation plan to clear the pensions backlog and deliver the service they are contracted to deliver. 

In our weekly meeting with the Cabinet Office (31 July) PCS requested consultation arrangements with Grant Thornton, as well as detailed terms of reference for their appointment. PCS members who have suffered at the hands of Capita are well-placed to advise on what needs to be done to resolve this mess.

Director of Civil Service Pensions Richard Vianello is set to give a progress update on 6 August. I share the scepticism of many PCS members that this update will demonstrate Capita’s remediation plans are working, even having been bailed out with outside help.

In last week’s update I asked PCS members and reps to notify us if you have delayed your retirement because of the pensions crisis. 

Our inbox has been flooded with even more testimonies from members who have been forced to continue working or have been relying on savings and hardship loans in retirement. These are the real-life stories that demonstrate the devastation that Capita has caused. 

General advice to PCS members

While progress has been slow, the union has secured a commitment that Capita will now prioritise cases escalated on behalf of members. Scheme members should therefore continue to escalate cases, particularly where they have experienced severe hardship or bereavement through pensions@pcs.org.uk

Members are advised to register for the member portal and use the complaints procedure. The process starts with a complaint to Capita. After 30 days, unless the complaint is resolved, complete and submit form IDR1 to Capita to begin the Independent Dispute Resolution process. Where the first stage fails to resolve the issue, the case goes to the Scheme Manager using form IDR2. It is important to use these processes which give the scheme member the ability to seek redress through the Pension Ombudsman, who will only consider cases that have been taken up via the IDR process. 

Interest payments

To date there is no sign that Capita have a system in place to pay interest which would have been accrued as the result of delays or inaccurate pension awards. PCS is pressing the Cabinet Office to make sure these interest payments are included in the remediation plans.

Voluntary Early Severance (VES) payments

Continuing to make calculations under the Civil Service Compensation Scheme for civil service employers remains part of the Capita contract. Some employers have experienced difficulties getting calculations during the current delays at Capita. The Cabinet Office has issued guidance to employers on how to make calculations where no calculation of pension is involved. It is important to note that access to pension can be a contractual right in redundancy terms for some civil servants from the age of 50 and for all civil servants from the age of 55. 

Where Voluntary (or Discretionary) Exit Schemes are set up by employers, facing potential redundancies, it is particularly important that members understand their continuing contractual rights to the full Civil Service Compensation Scheme (2010) terms. Groups and Branches with questions about this should send them in via pensions@pcs.org.uk

Government must uphold commitment to insourcing

All the external assistance to Capita, including the appointment of Grant Thornton, raises an obvious question - how much more outside help should Capita be given to fulfil their contract and deliver an acceptable service? A succession of governments has relied on outsourced services to deliver government contracts. The government’s inability to manage these outsourced services, together with the failures of outsourced companies to deliver, is well documented.

Labour’s stated commitment to insourcing must apply generally across the public sector as well as to the delivery of civil service pensions. 

On 29 July I wrote to Pat McFadden MP, newly appointed Secretary of State for Work and Pensions, seeking an early meeting and once again reiterating the argument that the “Synergy” contract, awarded to Capita to deliver Pay and HR to more than half the civil service, should be formerly reviewed.

The misery Capita has caused to PCS members waiting to retire, ongoing Parliamentary scrutiny of Capita’s performance, and the absence of promised consultation arrangements on the Synergy contract demonstrates why public services are better off in public hands. PCS members are justifiably demanding that the government upholds its commitment to the “biggest wave of insourcing in a generation”. I will continue to argue in the strongest possible terms that ministers uphold that commitment.

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