The government will face a large compensation bill related to failures in the Capita-run Civil Service Pension Scheme (CSPS) administration if members follow the example of teachers who won rights to compensation in the High Court.
The NASUWT Teachers’ Union announced last week it had secured around £750,000 in financial compensation from the Department for Education for 83 members impacted by failures in the Teachers’ Pension Scheme administration, which was run by Capita for about 20 years up until this month.
Thousands of retired and serving civil servants have been impacted by Capita’s CSPS failures, with many suffering severe financial distress. A campaign group set up to support them said: “We hope the unions will explore the possibility of similar legal action as that taken by teachers, whilst being careful not to raise false hopes.”
The members of the teachers’ pension administration scheme run by Capita have been forced to wait months, and in some cases more than a year, for legally required pension valuations known as cash equivalent transfer values.
The scheme has now switched to Tata Consultancy Services after the migration of accounts late last month and at the beginning of this month.
Matt Wrack, general secretary at NASUWT, said: “We gave the Department for Education (DfE) ample time and opportunity to resolve this matter, but their failure to address this satisfactorily left us with no choice but to take legal action.
“They were left feeling distressed and suffered financial harm because the DfE failed to meet its legal duties,” he added. “Teachers who had paid into their pensions in good faith had every right to expect the [pension scheme] to be there for them when they needed it.”
Computer Weekly asked the Department for Education what responsibility Capita has for the failures and the financial redress, which is now owed as a consequence, but it had not responded when this article was published.
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Ryan Bradshaw, partner at law firm Leigh Day, which represented the claimants, said: “This regrettable situation has once again highlighted the issues of maladministration that arise all too often when public services are outsourced to private providers.”
There could also be a knock-on effect on the CSPS scheme. The scheme, which has 1.7 million members, switched from MYCSP to Capita in December 2025, after a two-year preparation period. Members of the scheme have since been hit by significant delays in receiving pensions (see timeline below).
If there is a large compensation bill, Capita could be made to pay. In a written parliamentary answer on 26 October 2026, responding to John McDonnell MP, Cabinet Office minister Sally Jameson said: “We intend to seek to recover all the government’s delay-related costs, and that Capita bear the costs of their failure, not the taxpayer.”
The matter of compensation for CSPS members affected has also been raised by MPs campaigning for affected constituents.
Last month, MP Euan Stainbank asked Jameson what consideration she has given to a compensation scheme for those who have experienced delays in administration of their civil service pension. She said in a written statement: “Interest will be paid on delayed benefits to avoid financial loss by members.
“In addition, the existing statutory complaints process evaluates claims for financial losses, as well as distress and inconvenience caused, on a case-by-case basis to determine whether compensation is due. This ensures that any retiree who provides evidence of extra costs, such as bank penalties or interest charges caused by the delay, is fairly assessed. All complaints will be handled with reference to Pensions Ombudsman standards.”
The Civil Service Campaigns Group, made up of people affected by the delays, told Computer Weekly: “This is an encouraging development for CSPS members who have suffered as a result of Capita’s failures. Whilst we don’t yet know whether the legal circumstances are comparable, any opportunity to explore financial redress is certainly welcome.
“Thousands of members continue to be affected by this crisis, suffering financial hardship, mounting debt, emotional distress and deteriorating health as a result of Capita’s maladministration of the scheme and the Cabinet Office’s continued failure to hold the contractor properly to account.
“Our immediate priority remains restoring normal service levels and getting pensions paid without further delay. However, members should not be expected to bear the consequences of failures entirely outside their control.”
Computer Weekly contacted the PCS union, which represents civil servants, but it had no comments at this time.
