A Public Accounts Committee (PAC) report has concluded there is a “real risk” that Capita will not be ready to take over the administration of the Civil Service Pension Scheme (CSPS) on time, but the outsourcer has hit back claiming the report is “not reflective of the current state of the transition”, and that it contains inaccurate information.
The PAC report on the administration of the CSPS cites inadequate staff levels, unrealistic automation targets and missed IT milestones as concerns.
In 2023, the Cabinet Office awarded Capita a seven-year contract worth £239m for the administration of the CSPS, which has 1.5 million members.
The takeover from current administrator MyCSP is due on 1 December 2025. The PAC said the Cabinet Office informed it that it was undergoing a reset plan over the summer, before making a decision in September on whether to continue with the transition as planned, but it added that the decision to go ahead with the contract award has not yet been confirmed.
When awarded the contract, Capita said it “will modernise pensions administration systems through enhanced system design and digital innovation”.
This includes, it said, integrating generative artificial intelligence technology to services for pension members.
Capita administered some elements of the pension scheme before MyCSP took over the administration of the whole scheme in 2014, but from December, Capita will take on full responsibility.
Over-ambitious targets
However, according to the report by MPs on the PAC, a planned reduction to the workforce, over-ambitious automation targets and the decision to use a simplified IT option in the interim have cast doubt on Capita meeting the deadline.
The report also said Capita plans to reduce the number of staff running the scheme by 33 to 299. The Cabinet Office, which awarded the contract, told the PAC that fewer staff would be needed as automation technology is adopted. “For example, it was assumed in Capita’s plans that 95% of transactions would be automated,” the report stated.
But the PAC said Capita has also missed milestones for delivering its IT infrastructure, and will now produce a simplified IT system when the contract begins, “to de-risk delivery, with further functionality currently expected to be deployed by March 2026”.
Contrary to PAC claims, Capita told Computer Weekly it will in fact be employing more staff (506) than are currently employed by MyCSP (332), “not 33 less than MyCSP as suggested in the report”.
It said: “[We are] preparing to take on administration of the Civil Service Pensions Scheme (CSPS) from 1 December 2025, working with the Cabinet Office to support a successful transition.”
The report stated that Capita has only delivered one out of eight transition milestones on time, and that the Cabinet Office has already withheld £9.6m from Capita due to delays.
“The Cabinet Office acknowledged that delays to key deliverables were a significant concern, though noted that each milestone has a range of work packages that sit underneath it, and therefore focusing on the completion of the whole milestone probably belies how much work has actually happened,” said the PAC.
“It told us that it believed Capita had underestimated the complexity of the transition and the length of time it would take to implement the technology, and that it was working with Capita to produce a new delivery plan with realistic dates.”
The PAC said the Cabinet Office “asserted” that it has back-up plans. These include a more gradual roll-out of the Capita technology, as well as other options that could not be detailed due to commercial sensitivity.
It added that the Cabinet Office has previously failed to manage the “successful transition” from one pension scheme to another without a drop in performance levels during that period.
“MyCSP’s poor customer service record over the last two years mirrors the same drop-off that occurred when Capita was handing elements of the scheme administration over to MyCSP in 2014,” the PAC said.
