Civil Service Pensions

Nusrat Ghani Excerpts

Monday 6th July 2026 Commons Chamber

[The Paymaster General and Minister for the Cabinet Office (Nick Thomas-Symonds)]

I want to provide the House with an important update on the administration of the civil service pension scheme. Capita was awarded this contract in November 2023. It had two years of transition to prepare, and its senior leadership gave me explicit personal assurances ahead of the handover that they were fully capable of managing the workload and that they were ready for a successful transition. Indeed, the chief executive promised that technological improvements would create a flagship use case for the largest AI-enabled pension scheme in the country. It is clear that non-delivery of technology has been a fundamental part of Capita’s inability to deliver. The reality is that it was completely unprepared and its system was overwhelmed, which resulted in a backlog that skyrocketed to a staggering 120,000 unresolved cases.

In response, I intervened immediately and established the Cabinet Office pensions recovery taskforce. Capita committed to two critical recovery targets: an end of April milestone to clear the inherited arrears, and an end of June milestone by which point it promised a complete return to standard contractually required levels. Capita missed its own April milestone. The end of June deadline has arrived, and I regret to inform the House that Capita has failed to meet that milestone, too. Seven months on from taking over operations, too many pension scheme members still face unacceptable delays after years of dedicated public service.

Since my last statement on this matter, thousands of quotations have been issued and pensions put into payment. Capita had committed to clearing the quotes backlog by today, but I am afraid that the reality remains very different. As of the end of June, there are still more than 6,700 quotations outstanding for past retirement dates, and more than 4,100 bereavement cases on which Capita could take action. These are the most harrowing stories, affecting devastated scheme members and grieving families. My officials have forcefully escalated those systemic back-office failures directly to Capita’s senior leadership, demanding an immediate investigation and resolution.

I have to be frank with the House: what progress has been achieved is due to the significant additional capability provided by the Cabinet Office pensions recovery taskforce, and a team of more than 140 officials whom I have “surged” into the process. Let me also say that public money will not fund Capita’s failings. We will recover every single penny of these surge costs directly from Capita, and I will not remove a single member of the team until the service is permanently fixed and fully restored.

Across core areas of pension payments, quotations and complaints, the operational reality remains deeply concerning, and although the speed of quote issuance has accelerated over the past month, it still leaves more than 6,700 outstanding quotes to be processed, as of the end of June, for past retirement dates.

Let me turn to the subject of parliamentary correspondence. The volume of MP complaints remains too high—there are more than 1,900 outstanding constituent cases. I understand that Capita resolved nearly 700 last week, but another 500 or so complaints were raised, so this remains all too current an issue. When I last reported to the House, the figure stood at 1,500. The growth of the backlog is completely unacceptable. Capita has clearly failed to manage the correspondence effectively, to the extent that I have had to ask the pensions recovery taskforce to step in. Indeed, the situation has been so faltering that the Parliamentary Secretary at the Cabinet Office, my hon. Friend the Member for Southampton Test (Satvir Kaur), has written to Mr Speaker about it.

Because of Capita’s persistent failures, alongside a wider, completely unacceptable failure in its overall MP engagement, demonstrated—as was reported to me by Members from across the House—by a poorly co-ordinated MP drop-in session at the end of May, I had to intervene again. I ordered the pensions recovery taskforce to take direct operational control and establish virtual surgeries for MPs and caseworkers running every weekday. I hope that has provided at least a direct route for parliamentary offices to try to secure updates. Since I launched that initiative in May, we have delivered more than 250 virtual surgeries, supporting more than 150 Members from across the House.

Let me now turn to the steps that I am taking to protect scheme members. I have no doubt that all Members will agree with me that the service that Capita has provided has been dreadful. We need to take further robust measures. First, I will continue to apply the most stringent commercial levers. We are executing robust, continuous action with immediate financial consequences. We have already hit Capita’s bottom line by withholding £9.9 million in payments, because the Government will only ever pay for what is successfully delivered.

I find this failure remarkable in the light of the personal assurances given to me by the chief executive ahead of the transfer. Those assurances have not been met. Core outputs are deficient, and Capita is failing even to make basic functionality work. I know that many Members are calling for the immediate termination of the contract and the insourcing of the service, but if I were to terminate the contract straightaway, that would clearly cause severe disruption to the payroll. I have to manage this so that the payroll is operated effectively; what I cannot do is create an immediate, catastrophic operational vacuum. I cannot replace a complex pension operation overnight. However, I have instructed my officials to bring together a broad range of stakeholders and experts to consider, in line with the Government’s strategy, how scheme members can best be served by a long-term, durable delivery of the scheme. Let no one think that I or the Government are accepting the status quo.

This episode highlights the severe limitations of outsourcing the civil service pension scheme. I say openly to the House that if I could insource this operation today, I would do so. None the less, it is Government policy to insource, in line with our manifesto commitment to deliver

“the biggest wave of insourcing of public services in a generation”,

and this pension scheme could be a prime candidate for insourcing in the future.

That future is being actively shaped by the Government’s announcement on 17 June of a new public interest test that will end outsourcing by default. From April 2027, all contracts over £1 million in value must be assessed for in-house viability before renewal, and Departments exceeding £100 million in annual spend must develop five-year insourcing strategies. This framework builds the exact long-term capability that we need, shifting our focus from short-term pricing to service quality and operational resilience. To ensure full accountability, we are executing our contractual right to deploy independent auditors immediately to conduct a technical review of systems, data integrity and compliance with statutory duties. We are also beginning the process to appoint a remedial adviser, at Capita’s expense, to force rectification directly on the ground.

I am not ruling out further interventions, but we need to build the unvarnished evidence base that will serve as a strict prerequisite for further formal escalation, including potential litigation or step-in remedies, should performance fail to improve. In October, the House will receive a further update on the findings of the independent audit, the performance of the remedial adviser and the longer-term structural options being considered, including meeting our manifesto commitment by bringing the scheme in-house.

Let me finish by saying this. Public servants who dedicated their working lives to this country deserve absolute financial security and unwavering dignity in retirement, not corporate failure, empty promises and severe administrative failure. I hope the House will see the uncompromising line in the sand that I am drawing today. I will continue to apply commercial pressure and ensure full accountability, and we will find a way forward that delivers for the people who deliver for this country. I commend this statement to the House.

[Madam Deputy Speaker]

I call the shadow Minister.

--- Later in debate ---

[Mr Clive Betts (Sheffield South East) (Lab)]

The Public Accounts Committee and Sir Geoffrey Clifton-Brown, its Chair—

[Madam Deputy Speaker (Ms Nusrat Ghani)]

Order. We refer to colleagues not by their names, but by their constituencies. You have already named the Chair of that Committee, so dive into the question.

[Mr Betts]

I will dive very deeply into the question, Madam Deputy Speaker.

The Chair of the Committee sends his apologies for his absence; he is presently in a Committee meeting. We have looked at this situation on a number of occasions, and we will have a joint session with the Public Administration and Constitutional Affairs Committee and the Minister on Wednesday. The individual cases that we have heard are absolutely appalling, and we will relate them to Capita and the Minister. We have heard from two widows who have been waiting since last year to get their pensions sorted out, which is not acceptable.

I have two issues for the Minister to reflect upon. When the previous Government let the contract, we were in a situation in which procurement could not properly take account of the past record of companies, and I understand that the Government have now changed that. Looking at Capita’s past record on both the teachers’ pension scheme and the civil service pension scheme, we see that it has not run one scheme properly. That should have been taken into account before the contract was let. 

The other issue, and this is where the Opposition spokesperson did say something relevant, is that this scheme was falling apart last year. The National Audit Office looked at it, and clearly it was going wrong then. So I ask the Minister: did he start to look at alternatives then and did he at that point start to put together in-house provision that could eventually take over?

[Nick Thomas-Symonds]

My hon. Friend is absolutely right that these cases are harrowing. He is also right to say that there were huge issues—I am sure we will cover this on Wednesday—with MyCSP, the previous provider. As I have said, the previous Government decided to sign this contract in November 2023. That is not, of course, to say that I was just seeking specific reassurances last autumn; we were also looking at contingencies. I am sure that he, and indeed the hon. Member for North Dorset (Simon Hoare), will cover that in the two Committees’ joint evidence session on Wednesday.

[Madam Deputy Speaker]

I call the Liberal Democrat spokesperson.

[Lisa Smart (Hazel Grove) (LD)]

I am grateful to the Minister for advance sight of his statement. The failure of Capita to meet the 30 June deadline is deeply disappointing, but, sadly, not surprising. Behind it sit 1.7 million current and former civil servants who simply want peace of mind that the pension they have earned through decades of public service will be handled competently, fairly and with dignity. Capita’s repeated failures are causing distress and uncertainty for people who deserve better, including several of my constituents, such as Sue from Romiley, Tracy from Offerton and Christopher from Marple.

The Public Accounts Committee did indeed warn that Capita risked not being ready to take over full administration back in December, and it raised serious concerns about weak contract management and poor oversight. Those warnings have now come to fruition as thousands of retired civil servants have experienced delays or complete failures in pension payments since Capita took over. How will the Government restore confidence for the 1 million-plus current and former civil servants who simply want reassurance that their pensions will be administered competently? What assessment has been made of the systemic failures in the administration of this scheme, and what lessons have been learned for future contracts of this kind? How can the Minister ensure that this failure is given sufficient weight should Capita have the brass neck to bid for any future Government contracts in this are or wholly unrelated ones?

The Minister has rightly called the thousands of unresolved bereavement cases harrowing. These grieving families are being denied closure. Will he commit today to ordering Capita to prioritise all bereavement cases as a matter of particular urgency, and will he guarantee that this specific backlog will be zero by a certain date?

--- Later in debate ---

[Several hon. Members rose—]

[Madam Deputy Speaker (Ms Nusrat Ghani)]

Order. To help more Members get in, questions need to be short and limited to just one question.

[Paula Barker (Liverpool Wavertree) (Lab)]

Like other Members across the House, I have constituents who have faced unacceptably long delays, including a terminally ill lady who has been left waiting for months; a man in severe financial hardship who was due his first payment in December 2025, but, shockingly, is being forced to wait until 2027; and a lady, whose brother died in service in 2024, who is unable to settle his estate due to the delay.

The Minister has talked about the missed deadlines, yet in February Capita was awarded more contracts across four Departments. Frankly, it is shocking that the Government are unable to pay the pensions of their own civil servants, who have spent their lives serving the public. When will the Government finally take the civil service pension scheme back in-house rather than rewarding failure? Will he assure the House that no further Government contracts will be awarded to Capita?

--- Later in debate ---

[Nick Thomas-Symonds]

I am grateful for the hon. Gentleman’s constructive tone. The Government have introduced the new public interest test to end outsourcing by default, which will mean that the reassessment will happen from the start of next year. It is important, as the hon. Gentleman fairly concedes, that we need to look back over a few years across different Governments.

[Madam Deputy Speaker (Ms Nusrat Ghani)]

Order. The questions are far too long. Too many colleagues will be disappointed unless questions are kept short. I call Kim Johnson to show us how it is done.

[Kim Johnson (Liverpool Riverside) (Lab)]

I really welcome the Minister’s statement, and his acknowledgment that Capita has failed—and failed miserably, not for the first time—1.7 million civil servants, including some in my constituency. I would like to ask him: what due diligence was undertaken, and how much profit is Capita making when it is not paying the living wage? Should you now consider sanctioning the company more than the £9.9 million, and will you please work with unions to—

[Madam Deputy Speaker (Ms Nusrat Ghani)]

Order. Gosh—a long question and the hon. Member is saying “you”; it is not my responsibility. Minister, over to you.

[Nick Thomas-Symonds]

Yes, we will continue to work with trade unions and other stakeholders. Yes, it is correct that £9.9 million in milestone payments has been withheld, but my hon. Friend can rest assured that I will not hesitate to continue to use all commercial levers if there is poor performance.

--- Later in debate ---

[Sorcha Eastwood (Lagan Valley) (Alliance)]

I also must declare an interest, as my husband is a civil servant and is currently paying into a pension. Does the Minister agree that this is one of the best examples we have of the social contract falling apart? People who have literally worked for the state are now unable to be paid by the state. I really welcome your statement about insourcing. You have said that it is important that the taxpayer not have to foot the bill—

[Madam Deputy Speaker (Ms Nusrat Ghani)]

Order. I have not said anything. End your question quickly.

[Sorcha Eastwood]

There has been a cost to the taxpayer in people’s lives. What can you do to restore confidence in the system?

[Madam Deputy Speaker]

Order. What can I do to restore confidence, or what can the Minister do? You mean the Minister?

[Sorcha Eastwood]

indicated assent.

[Madam Deputy Speaker]

Good.

[Nick Thomas-Symonds]

The hon. Lady is absolutely right to talk about the cost in people’s lives; considering what has happened when people are at their most vulnerable, it clearly goes beyond the monetary. We absolutely have to restore a contractual level of service as a priority and then, as I say, look at a range of options in the medium term.