Civil service pensions

More than half of members who are drawing their pension and affected by Remedy are facing unacceptable waits until as late as 2027 to have their pension options set out for them. Applying remedies to members requires MyCSP to send Remedial Service Statements (RSSs) to affected members, presenting them with their two pensions options. As of 26 March 2025, MyCSP had issued RSSs for 58,000 members who are drawing their 2 pension (44% of those affected), above the target of 43% that the Cabinet Office set. Data from July 2025 shows that there are still 53% of affected members who are currently drawing their pension, who are yet to receive their RSSs and have their choices processed. The Cabinet Office has stated that it is aiming to reach all members by 2027 but does not yet have a plan to deal with the remaining members and has not chosen a supplier to carry out the work. As the Remedy programme started in 2021, this means the Cabinet Office is planning on leaving some members waiting for up to six years before receiving the information they need about their pension entitlement. recommendation The Cabinet Office should set out in its Treasury Minute response its plan for dealing with the remaining members who are drawing their pension and affected by Remedy. That plan should include how it intends to communicate to members when they can expect to receive information allowing them to make their choices.

The Cabinet Office has not demonstrated it has sufficient capacity and capability to manage the MyCSP contract effectively and has now failed on two occasions to adequately manage the transition from one supplier to another. The Cabinet Office accepts that the terms of the contract with MyCSP does not enable it to hold MyCSP to account for its performance, despite having made multiple changes to the contract over its lifetime. For example, despite MyCSP’s mixed performance record, the Cabinet Office has only successfully applied two fines of total value of around £260,000 over the course of the contract, against a total contract value of around £238m. Additionally, this is the second time the Public Accounts Committee has seen the Cabinet Office fail to manage the successful transition from one administrator of the 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 Capita was responsible for when it was handing elements of the Scheme administration over to MyCSP in 2014. recommendation The Cabinet Office should set out in its Treasury Minute response: a. how it intends to ensure that it has appropriate commercial capacity and contract management skills such that it can hold the administrator to account; and b. what measures it intends to put in place to ensure adequate customer service from suppliers in the transition period between contracts. 3

In order to ensure a smooth transition from MyCSP to Capita it is important that appropriate consideration is given to the rights of staff members transferring across. MyCSP staff who are members of the PCS union have been on strike over the summer in protest at the lack of PCS involvement in Transfer of Undertakings (Protection of Employment) (TUPE) negotiations. MyCSP told us that the PCS union is not recognised by MyCSP for collective bargaining or otherwise, which it states is due to MyCSP being a part-mutual organisation with an elected, formal employee works council which is involved in negotiating terms, conditions and pay. It did, however, state that there were ongoing discussions between itself, Capita, the Cabinet Office and PCS about this issue. The Cabinet Office acknowledged these discussions too, while claiming that given it was not the actual employer it could merely advise and support where appropriate. It does however list staff retention as a key risk to be managed as part of the transition and identified staff shortages as being partly responsible for performance failures in 2024 and the decline in contact centre response times. recommendation The Cabinet Office should set out in its Treasury Minute response what its approach is to ensure that suppliers that it contracts with are committed to giving adequate recognition to the voice of employees, for example, through union recognition.

There is a clear risk that Capita will not be ready to take over administration of the Scheme as planned on 1 December 2025. The planned date of transfer of administration from MyCSP to Capita is 1 December 2025. However, of the eight transition milestones which have so far passed, only one has passed with all elements delivered on time. The Cabinet Office has stated that the delays are due to Capita underestimating both the complexity of the transition and the time required to implement the technology. The Cabinet Office has also stated that in the worst-case scenario it plans to continue with MyCSP’s existing systems, however currently there is no agreement with MyCSP to keep its digital systems in place. The Cabinet Office told us that it was undergoing a reset plan over the summer with the intention of then making a “go/no-go” decision in September on whether to continue or not with the transition as planned. The decision to go ahead with the contract award has not yet been confirmed. 4 recommendation a. The Cabinet Office needs to fully develop contingency plans should Capita be unable to take over the administration on 1 December 2025. b. The Cabinet Office should write to the Committee with an update on the transition plans immediately following the decision on whether to go ahead with the transition.

There has been a small market of pension administrators bidding for the contract, potentially limiting the Cabinet Office’s ability to secure value for money for the scheme administration. Capita administered only some elements of the pension scheme before MyCSP took over the contract in 2014 to administer the whole scheme. Capita is now taking on the responsibility for administering the scheme in full from MyCSP. The Cabinet Office says that the market of pension providers is quite small, undermining its scope to encourage competitive procurements and obtain value for money for the taxpayer. In light of the small market of pension providers and need across government to apply the McCloud remedy across several pension schemes, the Cabinet Office stated that it is currently reviewing the market to understand how to encourage new entrants and ensure market resilience. It also told us that when looking to procure any significant contract like this, there would also be consideration given to the costs and benefits of delivering the service in-house. recommendation The Cabinet Office should set out in its Treasury Minute response its overall commercial strategy for pension administration including consideration of the benefits and costs of administering the scheme in-house. 5 1 Customer service Introduction

On the basis of a report by the Comptroller and Auditor General, we took evidence from the Cabinet Office and from MyCSP on the administration of the Civil Service Pension Scheme (the Scheme) and arrangement beings made for the planned transfer of administration from MyCSP to Capita on 1 December 2025.1

We asked the Cabinet Office and MyCSP why complaint levels were so high. Both the Cabinet Office and MyCSP told us that complaint levels and performance failures in 2024 were partly attributable to a shortage of staff. MyCSP’s core staffing level peaked in October 2023 before declining from then to January 2025 by 11%. MyCSP said that the Cabinet Office awarding the contract to Capita had driven higher staff turnover, with voluntary turnover rates rising from 12% at the end of 2023 to 24% at the end of 2024. MyCSP also said that losing the contract was making it more difficult for it to attract permanent staff.11

We questioned MyCSP about what it was doing to ensure its staffing level was at the level it needed to be. MyCSP told us that it has recently increased staff numbers and contact centre performance is improving as a result. It said that staffing levels in April 2025 were at their highest level since October 2023.12 Data provided by the Cabinet Office following 6 C&AG’s Report, paras 12, 3.3 7 Public Accounts Committee, Civil Service Pensions Written evidence 8 C&AG’s Report, para 2.7 9 CSP0002 10 C&AG’s Report, para 2.10 11 Q 1 12 Q 3 7 the evidence session showed that there has been an improvement in 2025 in average call waiting times, which were 25 minutes in January but had reduced to 17 minutes by May.13 However, as MyCSP explained to us in the session, from 2017 to 2024 callers were waiting for an average of just three minutes.14 There are also slightly fewer calls being abandoned in 2025, down to roughly 25% in May 2025 compared with 30% towards the end of 2024.15

Capita is planning to have 33 fewer staff in its first year running the Scheme than the 332 MyCSP had at the start of 2025.16 When we queried whether that would be enough to provide the right levels of service to customers, the Cabinet Office told us that it had expected fewer staff to be required as increased automation and technology would enable Capita to operate with less resource. For example, it was assumed in Capita’s plans that 95% of transactions would be automated. However, it is clear that the Cabinet Office no longer expects that to be the case.17 This is because as part of the transition period, Capita has missed milestones for delivering its IT infrastructure and has agreed with the Cabinet Office to produce a simplified IT solution on 1 December 2025 to de-risk delivery, with further functionality currently expected to be deployed by March 2026.18 The Cabinet Office told us that with fewer transactions now expected to be automated than had been initially planned, Capita would need to replan resource levels accordingly.19 Remedy

In response to the 2018 McCloud judgement, the Government created the ‘Remedy’ programme to implement remedies to all affected members across the public sector. Applying remedies to affected civil service members requires MyCSP to send Remedial Service Statements (RSSs) to those members, presenting them with two pension options, essentially either calculated under the old legacy scheme rules or the newer arrangements that have been in place since 2015. More than 400,000 Scheme members are affected by Remedy and need to make a choice as to their preferred option. Around 130,000 of these members are currently drawing their pensions. By the end of March 2025, MyCSP had issued RSSs to 44% of affected members who are currently drawing their pensions, above the financial-year-end target of 43% that the Cabinet Office set.20 13 Letter from Cabinet Office, 28 July 2025 14 Q 14 15 Letter from Cabinet Office, 28 July 2025; C&AG’s Report, para 2.7 16 Q 96 17 Q 97 18 C&AG’s Report, para 3.7 19 Qq 96-97 20 C&AG’s Report, para 2.18 and Figure 11 8 Updated data from the Cabinet Office in July showed that there are still 53% of affected members currently drawing their pensions who are yet to receive their RSSs and have their choices processed.21

MyCSP is no longer processing Remedy cases whilst the Cabinet Office considers how it wants to deal with these remaining cases. We asked the Cabinet Office if it has a plan for when the remainder of those who are currently drawing their pension can expect to be contacted about their choice.22 The Cabinet Office stated that it is currently coming up with a plan for when and how to deal with the remaining affected members who are currently drawing their pension, and that it would be in a position to communicate timelines after the plan has been made. It said it is aiming to contact all members currently drawing their pension by March 2027.23 The Cabinet Office said that it is in discussions with potential suppliers with the aim of deciding who will take on the remainder of remedy work going forward.24

The Cabinet Office was unable to tell us how it will decide which members may be waiting up until March 2027 and explained that this would be determined by the data and how the plan is constructed.25 It said that the data comes from multiple sources, in some cases it is held by employers, in some cases members will need to be contacted directly, and in some cases manual records would need to be examined.26 21 Letter from Cabinet Office, 28 July 2025 22 Qq 58-59 23 Qq 59-60 24 Q 67 25 Q 61 26 Qq 62-64 9 2 Managing the transition Contract management and transitioning to new suppliers

The Cabinet Office accepts that the contract with MyCSP has not always given it sufficient commercial levers to influence how the Scheme is being administered,27 despite having made multiple changes to the contract over its lifetime. For example, despite MyCSP’s mixed performance record, the Cabinet Office has only successfully applied two fines of total value of around £260,000 over the course of the contract, against a total contract value of around £238 million since 2016.28

We asked the Cabinet Office what in the current contract was limiting it from holding MyCSP to account for its performance, and what lessons had been learned going forward with Capita. The Cabinet Office responded that the new contract with Capita now contains service-focused key performance indicators, and that failures against all performance indicators can now incur more severe financial penalties the longer underperformance goes on for. It also added that it will have access to a shared data repository with Capita, which would in future be an essential part of managing Capita’s performance.29 We queried whether the Cabinet Office considered the size of the financial penalties applied to MyCSP throughout the contract proportionate given the poor service that members had received at times. The Cabinet Office said that the financial penalties were one of many levers it used to encourage better service from suppliers, and that it wanted to use them “in combination with strategic and wider government leverage.”30

The Cabinet Office’s difficulties managing the contract are particularly evident when transitioning from one supplier to another. This is the second time the Public Accounts Committee has seen the Cabinet Office fail to manage the successful transition from one administrator of the Scheme to another without a drop in performance levels during that period. MyCSP’s 27 C&AG’s Report, para 3.9 28 C&AG’s Report, paras 1.5 and 1.15 29 Qq 68 30 Q 69-70 10 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 2014.31

We questioned the Cabinet Office about how we can be assured that it had the capacity to ensure that contractors deliver. The Cabinet Office said that it is fairly confident it has the right expertise and capacity to manage the contract, and that the contract management team is significant in size, with around 60 FTEs overseeing outsourced pension arrangements.32 We inquired further how the Cabinet Office can be sure that MyCSP’s performance will not get worse towards the end of its contract, and that Capita will avoid getting into difficulties. The Cabinet Office stressed the importance of making a success of the transition. It asserted that it had made changes to the way in which it transitions as a result of previous lessons learned, and that it would impose financial penalties on Capita from December in cases of underperformance. The Cabinet Office said that it will reset its transition plan in September, and that it would not go through with the transition if it was not confident that the service levels would be maintained.33 TUPE negotiations and staff concerns

On 24 June 2025, MyCSP staff who are members of the PCS union announced six weeks of strike action planned to take place in the period preceding the transition in protest at the lack of PCS involvement in Transfer of Undertakings (Protection of Employment) (TUPE) negotiations.34 TUPE regulations are intended to protect employees’ rights when they transfer to a new employer. MyCSP said that the decision to award the contract to Capita had driven uncertainty among staff and increased turnover rates. The Cabinet Office lists staff retention as a key risk to be managed as part of the transition35 and identified staff shortages as being partly responsible for performance failures in 2024 and the decline in contact centre response times.36

MyCSP told us that it does not recognise the PCS union for collective bargaining or otherwise, because MyCSP is a part-mutual organisation with an elected, formal employee works council who are involved in negotiating terms, conditions and pay.37 It did, however, state that there were ongoing 31 Q 75 32 Q 78 33 Q 75 34 PCS Press Release, 6-week strike announced at MyCSP, 24 June 2025 35 C&AG’s Report, Figure 13 36 Q 1 37 Letter from PCS union, 9 September; Letter from MyCSP, 15 September 11 discussions between itself, Capita, the Cabinet Office and PCS about the issue. It added that union membership and activity had increased substantially in the last six months, which it believed was due to the union seeking to be recognised when the transition to Capita takes place.38 We understand that Capita have agreed to move towards recognition with PCS and have been meeting with them to understand and agree on the precise terms and nature of the recognition. This is a positive development and underlines the importance of employers who supply contracts to government engaging meaningfully with unions including through formal recognition.

The Cabinet Office acknowledged that it is in everyone’s interests for unions and members of staff to be listened to and stated that its industrial relations team were providing support and assistance where appropriate. The Cabinet Office also acknowledged it has a responsibility to manage the risk of transfer. It made reference to ongoing discussions between the union, MyCSP and Capita, while claiming that given it was not the actual employer it could merely advise and support where appropriate.39 Following our evidence session the PCS wrote to us and stated that Capita had proposed to commence discussions with a view to recognising PCS in relation to members employed on the Scheme once the contract commences on 1 December 2025.40 However, on 1 August 2025 PCS announced a further six weeks of strike action, citing MyCSP’s continuing refusal to recognise the union or include it in negotiations.41

We queried with the Cabinet Office if it was normal practice to let a contract to an organisation that does not recognise trade unions.42 Although unable to give us a definitive answer at the time, the Cabinet Office subsequently wrote to the Committee to confirm that there is no government policy requiring trade union recognition in contracts.43 The Cabinet Office did say, however, that if non-recognition had a direct impact on performance, then it would be a concern from a value for money perspective.44 38 Qq 20-21 39 Qq 25-26 40 Letter from PCS union, 29 July 2025 41 PCS press release, MyCSP strike to be extended, 1 August 2025 42 Q 27 43 Letter from Cabinet Office, 28 July 2025 44 Q 29 12 Capita’s readiness for the transition

The planned date of transfer of administration from MyCSP to Capita is 1 December 2025. However, of the eight transition milestones which have so far passed, only one has passed with all elements delivered on time.45 At the end of March 2025, the Cabinet Office had withheld £9.6 million from Capita in transition payments due to delays.46 To derisk delivery, the Cabinet Office and Capita have agreed to deliver a simplified IT solution in December 2025, delaying expected greater functionality until at least March 2026.47 Prior to our evidence session in early July Capita provided written evidence to the Committee to assure us of its readiness to take on Scheme administration on 1 December 2025. It argued that where milestones have been missed, these have subsequently been met and stated that it was “firmly on track to assume full administration of the CSPS from 1st December 2025” with “enhanced, innovative services for members for when the contract commences”.48

We questioned the Cabinet Office how confident it was that there would be a smooth transition and that members would receive no disruption to service. 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. 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.49

We checked with the Cabinet Office what contingency plans it had should Capita’s IT systems not be ready on the transition date. The Cabinet Office asserted that it had several plans, including a more gradual roll-out of the Capita technology, and other options which are commercially sensitive, which it agreed to share with the Committee confidentially.50 It also stated that in the worst-case scenario it plans to continue as it is today.51 However, currently there is no agreement with MyCSP to keep its digital systems in place. The Cabinet Office stated that it was undergoing a reset plan over the summer with the intention of then making a “go/no-go” decision in September on whether to continue or not 45 Q 72 46 C&AG’s Report, para 3.6 47 C&AG’s Report, para 3.7 48 CSP0003 49 Q 72 50 Q 74 51 Q 76 13 with the transition as planned.52 It has since written to the Committee to provide an update on progress made to produce a new delivery plan for the transition, which it says is due to be completed in mid-August 2025, and to elaborate on how it is ensuring that Capita implement IT improvements, and how it intends to monitor improvements.53 Market of suppliers

Capita administered some elements of the pension scheme before MyCSP took on full responsibility for Scheme administration in 2014.54 Capita is now due to take on that full administrative responsibility from December. Capita already administers the Royal Mail Statutory Pension Scheme on behalf of the Cabinet Office. Capita also administers the Teachers’ Pension Scheme on behalf of the Department for Education, however its contract is coming to an end after 27 years. The Teachers’ union, NASWUT, is currently bringing a legal action against the government due to delays in producing Cash Equivalent Transfer Values, frequently required in divorce proceedings and for retirement planning.55

Noting the seemingly small concentration of suppliers, we queried with the Cabinet Office if the market for pension providers is too small and, if so, what it is going to do to ensure that it has more options in future contract tenders. The Cabinet Office responded that the market is quite small, with few outsourced providers. In light of the small market of pension providers and the need across government to apply the McCloud remedy across several pension schemes, the Cabinet Office stated that it is currently reviewing the market to understand how to encourage new entrants and ensure market resilience.56 Following our evidence the session, the Cabinet Office wrote to us and stated that it has started engaging with the Crown Commercial Service to understand what it may do to shape the market in future procurements.57

We asked the Cabinet Office if it considers the past performance of companies when procuring suppliers. It said that it did take past performance into account.58 Subsequently the Cabinet Office has written to the Committee to clarify that public procurement regulations state that consideration of a supplier’s past performance when tendering a contract 52 Q 75 53 Letter from Cabinet Office, 5 August 2025 54 C&AG’s Report, para 1 55 BBC News, Teachers in divorce ‘limbo’ take pension legal action, 24 March 2025 56 Q 79 57 Letter from Cabinet Office, 5 August 2025 58 Q 101 14 is at the contractor’s discretion, and that a supplier may be excluded from a tender on grounds of past performance only where past failures were significant such that a contract was terminated early.59

If the market isn’t sufficiently competitive, one option we suggested that the Cabinet Office could consider is what value there might be to bringing the work in-house. The Cabinet Office said that ‘insourcing’ was always considered when making such business case appraisals. It said that insourcing was generally, but not always, more expensive than outsourcing options, because of transition costs, transfer arrangements, and the ‘on-costs’ of joining the civil service.60 59 Letter from Cabinet Office, 5 August 2025 60 Q 108 15