Capita CEO Adolfo Hernandez earned £1.6m in his last pay packet, while thousands of retired civil servants were forced to apply for emergency loans because the company he runs failed to pay their pensions.
With almost all of Capita’s earnings coming from the public sector, it is the taxpayer ultimately footing Capita’s bills, including the CEO’s salary.
The substantial pay packet emerged during a Westminster Hall debate this week (15 September), which saw MPs chastise Capita for huge failings in the Civil Service Pension Scheme (CSPS) administration, which left many of their constituents in financial hardship after years of service to the country.
It is increasingly being referred to as a “scandal”, and while Capita’s boss received his large pay packet, more than 4,100 former civil servants and their spouses have been forced to apply for emergency loans.
Former civil servant Steve Tessier is still waiting for his pension, more than nine months after retiring. Tessier, who had a long career at the Ministry of Defence, as well as a spell on secondment at Nato, said: “It feels obscene that someone should trouser such a large sum when they have been responsible for causing misery and financial hardship for tens of thousands of people.”
Pressure in the chamber
During the Westminster Hall debate, Peter Prinsley, Bury St Edmunds and Stowmarket MP, outlined innate unfairness.
“I believe the CEO of Capita has an annual remuneration of £1.6m,” he said. “My constituent is a man who gave 33 years of service to the Metropolitan Police, and despite giving masses of notice of his retirement, never received his pension for at least six months. He wanted to fund his daughter for university; he was unable to do so. He took out loans from the police. He then developed cancer and is under treatment at my local hospital.”
Prinsley said: “This is an utter disgrace. It’s a complete disgrace.”
A CSPS claimant, who wished to remain anonymous, said: “Mr Hernandez took responsibility for this mess. Perhaps he has performed competently in other areas of the company which may justify his huge salary, but in this instance he has fallen abysmally short of being competent.”
“Perhaps he ought to hand back some of that salary, it could go towards hiring more staff, paying overtime or setting up a hardship fund for the bereaved who do not have access to the government bridging loan. Alternatively, he may put it towards any compensation for those affected.”
The government has so far approved over £100m to provide interest-free transitional support loans to those affected by pension delays, which has seen more than 4,100 loans made.
As revealed by Computer Weekly in August, Hernandez was slammed by a Capita staff member, working on pensions, after he made claims internally that the “right” things are in place to turn the botched CSPS administration around.
The comments from a staff member, which appeared in a message copied to all staff, cast doubt on Capita’s ability to fix the problems being experienced.
The staff member wrote: “The service provided by Capita surpasses your assertion of ‘not good enough’, it has been abysmal for members. The fact members have died in waiting due to this whole catastrophe is a really harrowing thought that none of us should have to live with, yet we sadly do.”
Capita and the Cabinet were asked questions about Hernadez’s pay packet and the number of emergency loans given, neither responded.
MPs must act
Prinsley suggested he and other MPs must be able to sort the mess out. “We all came to this place in order to change things,” he said. “Surely this is something that we can change…”
One of the things the government is hoping to do is insource the contract. It has already said it is “actively shaping a long-term strategy to bring the pension scheme back in-house” – a statement repeated by Sally Jameson MP, parliamentary secretary in the Cabinet Office. But there is still uncertainty among members of the scheme, the trade union and MPs about what this means.
Jameson went further in the Westminster debate when she said: “We stood on a manifesto as a Labour government to have the biggest wave of insourcing in a generation. I am personally committed to that. I’ve said in this house before that I think that’s a priority for this [CSPS] scheme…”
But she added that the government can only do it after making sure it’s in the interest of the scheme members. “We’ve got to make sure that there is no disruption,” said Jameson. “We’ve got to do it in the smoothest and quickest way.”
The government has already insourced a failing pension scheme run by Capita, when in April it terminated the supplier’s contract to administer the Royal Mail pension scheme. The government said the outsourcing provider “failed to deliver numerous milestones … following a failure to meet critical transition milestones, and a lack of confidence in Capita’s ability to implement and transition to the new operating model in a timely fashion”.
Tech didn’t work
The CSPS contract transferred from MyCSP to Capita in December 2025, after being awarded in 2023. Despite having two years to prepare for it, in the month following Capita’s takeover – amid delays and problems – an HM Revenue & Customs troubleshooter was brought in to lead an “urgent recovery plan”.
During contract bidding, Capita had claimed artificial intelligence would revolutionise the delivery of the scheme, but its project failed.
In a recent joint PAC and Public Administration and Constitutional Affairs Committee (Pacac) hearing, Pacac chair Simon Hoare MP said Capita had two years to prepare for the takeover of CSPS in December 2025, yet the technology behind its stated the “artificial intelligence” revolution failed.
In that meeting, Hoare reminded CEO Hernandez and his colleagues of promises made to government during the contracting process. The Cabinet Office was told “the two-year transition period would lead to the digital artificial intelligence revolution to deliver a world-class, world-leading pension service. None of that met neither the novel nor the basic”.
CSPS member Tessier told Computer Weekly that accountability does not rest solely with Capita. “Who in the Cabinet Office took the decision to go ahead with the contract despite strong warnings from the National Audit Office (NAO) and the Public Accounts Committee (PAC)? And what consequences – financial or otherwise – have there been for that individual (and any others who may share responsibility)?”
Speaking during the Westminster Hall debate, MP Charlie Dewhirst raised similar questions of the government. He said ministers claimed they received personal assurances from Capita as to its readiness to take over the scheme, and they have not said why they chose to believe these claims despite the findings of the NAO and the PAC: “Can the minister clarify who in their department authorised the go, no go decision in November 2025, [and] what criteria was used to make that decision?”
Government mission
Beyond this debacle, the government has declared its plan for the biggest wave of insourcing in a generation. In July, Cabinet Office minister Nick Thomas-Symonds said he would insource CSPS “today” if it was possible.
Speaking in the Westminster debate this week, Ian Byrne, MP for Liverpool West Derby, who secured the debate on the CSPS disaster, described Capita’s handing of the pension scheme as an example of the failure of outsourcing.
“This is the failed ideology of outsourcing laid bare,” he said. “Born under Thatcher, followed by successive governments of all colours in the name of efficiency, while delivering to absolutely the opposite and putting the burden on ordinary people.”
He highlighted Fujitsu’s role in the Post Office scandal and the failing water industry as further examples. “How many more examples must we bring before this House before the political establishment finally accepts that this experiment has completely failed?”
Lorraine Beavers, MP for Blackpool North and Fleetwood, like minister Jameson, said she “stood on a manifesto that promised the biggest wave of insourcing in a generation”.
“[The CSPS] case is only one of the many since 1980s where the responsibility of the state has been outsourced to private companies who have consistently failed to deliver for working people,” she said. “I will not stop fighting until this scheme is brought back where it belongs.”
While there was support for insourcing among MPs at the meeting, others did not believe it to be the answer.
Plain English, please
About 80 MPs have now signed an open letter to Capita’s public sector boss, Richard Holroyd, requesting a “plain language” explanation of “what has happened since the last update, what work remains outstanding, whether there are any barriers preventing progress, what the next step will be, and where possible, an indication of when that next step is expected.”
The lack of information is causing huge stress amongst CSPS members waiting for the money they are owed and, in many cases, desperately need. They are being held for hours on the phone waiting for support.
The Pensions Before Profit Campaigns Group, set up in April this year to campaign around the Civil Service Pension Scheme crisis, is run by a small group of volunteers and supports more than 20,000 members.
Following the Westminster Hall debate, the group said in a statement: “We welcome the very belated recognition that Capita’s claims and shifting targets cannot be accepted at face value. We were encouraged by Minister Sally Jameson’s honesty at the Westminster Hall debate about the scale of the crisis, her acknowledgement of members’ lived experiences and her willingness to challenge Capita.”
But it added that it believes “Capita continues to treat the Public Accounts Committee, the government and scheme members with contempt”.
Its claims that calls are answered within eight minutes and cases are resolved “once and done” are completely at odds with members’ experiences of lengthy waits, repeated contacts, lost documents, inaccurate information and months of delay.”
