Source · Select Committees · Public Accounts Committee
Recommendation 25
25
Rejected
Small market for outsourced pension providers necessitates review to encourage new entrants and resilience
Recommendation
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
Government Response Summary
The government disagrees with the recommendation, stating it adheres to the Procurement Act 2023, conducts market analysis, and reviews in-house solutions before making procurement decisions, ensuring equal treatment and transparency across the process.
Government Response
Rejected
HM Government
Rejected
6. PAC conclusion: 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. 6. PAC 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. 6.1 The government disagrees with the Committee’s recommendation 6.2 The Procurement Act of 2023 outlines the requirements for ensuring equal treatment and transparency across the procurement process. The Cabinet Office is legally required to follow the guidelines as set down by the Act. 6.3 The Cabinet Office follows the standard procurement procedure when deciding on the needs of the contract this includes. • Identifying the need • Performing market analysis • Developing a sourcing strategy 6.4 During early stages of any procurement several options are reviewed, these include reviewing whether an in-house solution is a viable option as well as the outsourcing options before any decision on procurement direction is made. 6.5 All options are then assessed against a series of critical success criteria to determine the most appropriate solution for the service. 6.6 The Cabinet Office will continue to comply with the Procurement Act 2023 and any future iterations for all future procurement exercises relating to Pensions.