Civil Service Pensions

Lindsay Hoyle Excerpts

Monday 26th October 2026 Commons Chamber

[The Parliamentary Secretary, Cabinet Office (Sally Jameson)]

I wish to provide the House with an update on the administration of the civil service pension scheme. I must declare my own interest as I hold a civil service pension with His Majesty’s Prison and Probation Service.

As we know, the previous Government awarded the contract to Capita in 2023. Earlier this year, in response to significant performance issues, the Government intervened to increase scrutiny and oversight of the scheme’s administration. Capita committed to recovery milestones for April and for June, both of which it failed to meet. In June, we exercised our contractual rights and mandated Capita to produce a rectification plan and—at Capita’s expense—appoint a remedial adviser to assess the plan. The Government also appointed an independent auditor to assess the effectiveness of Capita’s operational arrangements up to July.

Capita committed to the House to deliver recovery milestones in September, which it states it has achieved. However, I want to be clear that that does not reflect members’ lived experience or my own correspondence. Those were self-imposed, self-determined and self-assured targets. Many hon. Members, unions and scheme members have written to me asking why, if Capita has met those targets, they still do not have their quote, their pension remains unpaid and they are struggling with no income despite years of commitment and public service. Building on the good work in holding Capita to account undertaken by my predecessors, my right hon. Friend the Member for Torfaen (Nick Thomas-Symonds) and my hon. Friend the Member for Southampton Test (Satvir Kaur), I have taken further clear and definitive action to continue that work and ensure that Capita has its feet held to the fire.

We have seen some small improvement on priority cases, with Capita now processing more than it receives, and I acknowledge that Capita staff on the ground are working hard in difficult conditions. We are also seeing some slow improvement on technology, with Capita confirming that increased volumes are being managed through automation. It is also rolling out new tools that allow eligible spouses and dependants to view pension payslips and make online inquiries.

However, the question remains: why has it taken this scale of Government intervention to force Capita to act? Since taking up this role, I have met the CEO and his senior team twice, and on both occasions expressed in no uncertain terms my outrage at their performance throughout this contract. We were promised

“the most AI-enabled Pensions service”.

It is fair to say that Capita has comprehensively failed to deliver on that commitment. The progress overall has been abysmal. Complex issues remain unresolved for too long—1,800 cases for more than a year. Although some individuals have more than one case, too many members and family are still left waiting in limbo. The administration issues have also had a knock-on effect on the progress of Capita’s work on the McCloud remedy. I will update the House on that issue next month.

The House will be aware that my predecessors rightly directed Capita to appoint a remedial adviser and Cabinet Office to appoint an independent auditor through the Government Internal Audit Agency. My officials have this month received the remedial advisory report and the auditor’s interim report, giving independent and objective perspectives. It will not shock this House that the independent adviser’s report clearly shows that Capita’s rectification planning was wholly insufficient, its technology was weak, and its ambition was falling well short of restoring the quality services that members deserve. Poor performance has been evident, but the reports now provide detailed and actionable recommendations, including a new recovery plan for the whole service, with a road map for technology and a focus on data.

The remedial advisory report concluded that, in a service whose success firmly relied on automation, Capita did not deliver the promised technology, that it had not been applying the right techniques to understand demand, productivity and capacity, and that it had not put in place effective mechanisms to detect and escalate failure. Well, I have certainly detected a lot of failure, as have many in this House. For the sake of the dedicated people who are waiting for their pensions, we must not allow the service to fail them further. It is clear that Capita cannot do that on its own. A new plan is needed.

I agreed with Capita executives that Cabinet Office officials would work with Capita to develop a credible, workable and realistic recovery plan for which Capita alone will be held to account. I can confirm that, for the first time, Cabinet Office officials now have full access to Capita systems and data. I have put in place expert teams to work alongside Capita to agree priorities, improve quality and processes, and ensure that pensions are paid correctly.

The new recovery plan is made up of five workstreams. The first three workstreams look at cases of differing levels of complexity, the fourth ensures that significant exercises such as the McCloud remedy are not overlooked, and the fifth, on technology, tackles issues around infrastructure that support delivery. We will require Capita to evidence its focus on fixing complex cases, ensuring that this plan makes the difference that Capita’s original plan could not. Capita has committed that every member with a complex case will be written to in the next month, ensuring that they understand where they are in the system and how they will be supported. Old cases will no longer be allowed to sit on backlogs without progress. Any stuck quote or payment will be actively managed through revised complex case management.

Capita’s new plans will be further supported by challenge and advice from a new group of senior experts, drawn from across the civil service and led by the Cabinet Office. These problems were not created by civil servants, but it will be through the expertise, commitment and perseverance of the civil service that operational delivery is supported and we shape the solutions with Capita. Capita must be open and transparent. We will be publishing fortnightly scheme updates on the pension scheme website, with the number of outstanding complex cases broken down by age, the service levels for straightforward cases and the number of other tasks that are outstanding. We will do so until performance has been stabilised.

I want to be clear that while we are leaning in with expertise, Capita remains absolutely accountable for service delivery. It will need to deliver its contractual obligations and pay for its failures. We will continue to apply commercial levers to recover costs incurred, including holding back nearly £10 million of statements. Throughout this crisis, hon. Members have shown why they and their teams are so valued by their constituents. To support that, we have delivered over 1,300 surgeries for more than 320 MPs. I will provide further updates on the progress of our recovery plan in the coming months.

In addition to the immediate ongoing recovery plan, I want to update the House on the longer-term strategy for the scheme. Following our previous commitments to Parliament, my officials have led an extensive programme of engagement with trade unions, practitioners and experts. The evidence from those sessions was clear: restoring operational resilience and member trust must be the approach. I have instructed my officials to evaluate the viability of a range of future delivery options, including insourcing all core business operations.

There are a number of different insourcing models in operation across the public sector that we will learn from, and we will consider which is the best approach to take for the civil service pension scheme and all the other schemes that it interacts with. Once those assessments are complete, I will return to the House to provide a further update, but in the here and now, Capita must deliver.

This Government inherited a broken, outsourced administration. We cannot replace a complex pension operation overnight, but let me be clear: this Government will hold Capita to account and continue to apply the most stringent commercial levers, and we will not rest until every civil servant receives the pension they are entitled to. I commend this statement to the House.

[Mr Speaker]

I call the shadow Minister.

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[Sally Jameson]

I will indeed be holding Capita’s feet to the fire every single step of the way on the rectification plan. Now that we have access to the Capita systems, we will be able to track its progress every single day, as I know Cabinet Office officials are doing. As I said in the statement, we will be publishing figures every two weeks so that people can see for themselves how Capita is performing. If it is not up to scratch, I will return to the House.

[Mr Speaker]

I call the Liberal Democrat spokesperson.

[Lisa Smart (Hazel Grove) (LD)]

I thank the Minister for advance sight of her statement and for the briefing last week. Since the last ministerial statement in July, Capita is reported to have met its own September target on priority cases, but as the Minister has said, that does not match lived experience and hon. Members have heard promises of improvement before.

Capita missed both its April and June targets, and months later it is being propped up by a Cabinet Office taskforce. I welcome the news from the Minister that Capita is improving its technology, and I am glad that it has been deploying additional resources to support improvements to its dashboard so that it can get through more cases. Time will show us if that work actually results in Capita working through its backlog—there are still too many people across the country waiting.

My constituent, Diane, who lives in Offerton, applied for retirement at the end of August last year. She finally received her formal quote this month—a full 14 months after applying. It was a whopping £14,000 less than she was informally quoted, which may well have changed her decision to retire had the quote been received in a reasonable timeframe. There are 1.7 million current and former civil servants who simply want to know that their pension will be handled competently, fairly and with dignity. I heard the Minister’s statement on holding Capita to account, but will she say, in terms that our constituents will relate to, exactly how she is planning to do that and what the impact will be on families around the country?

I note the Minister’s comment on debarment, but, given the absolute shambles Capita has made of this situation, can she truly say that she would be happy for it to bid for future Government contracts? Will the Government finally commit to inflation-linking payments for all outstanding cases in order to ensure that those affected by Capita’s mistakes do not pay even more for Capita’s delays?

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[Sally Jameson]

In terms of the timelines, I do not want to set a date here today and end up with there being disappointment. However, now that the figures are going to be released every fortnight, if we do not start to see pretty rapid improvement over the next month, I will come back to this House and explain the next steps that might be taken.

[Mr Speaker]

I call the Chair of the Public Accounts Committee.

[Sir Geoffrey Clifton-Brown (North Cotswolds) (Con)]

I thank the Minister for her statement, but the situation is worse than she has outlined. We have had four PAC inquiries into Capita’s administration scheme this year, and it has missed virtually every single one of the deadlines that it set out in each of those hearings.

The latest revelation I have discovered is that if Capita does not pay out the lump-sum payment due to bereaved relatives within two years, those relatives will have to pay tax at the highest rate. I wrote to the Minister about that issue; she very kindly replied and had a meeting with me, and she told me that there were not likely to be more than 10 such cases. I find that improbable, given that the scheme has 1.7 million members. Indeed, The Guardian has published an article saying that 1,600 members have been waiting for over 100 days, so it is likely that many of these people will get up to the two-year deadline. Can she guarantee to the House today that she will either enforce Capita paying compensation for any lost money, or change the law so that none of the people in that very vulnerable position, waiting for their payment, will be worrying about whether they will pay tax?