Pension Schemes

Baroness Finn Excerpts

Tuesday 28th April 2026 Lords Chamber

The security and dignity of all those who have dedicated their careers to our Civil Service and the Royal Mail are not negotiable. They deserve a pension service that is reliable, efficient and secure. We will continue to use every lever at our disposal to ensure that those standards are met and that members receive the service they have earned. I commend this Statement to the House”.

[Baroness Finn (Con)]

My Lords, I declare my interest as a former special adviser and future recipient— I hope in the long-distant future—of a civil service pension. At the heart of this issue are former public servants who are entitled to expect that the Civil Service Pension Scheme would be administered with competence, care and basic humanity. Instead, many have faced delay, uncertainty and financial anxiety. The Government have acknowledged that Capita’s performance was unacceptable, and we acknowledge that this contract was awarded under the previous Government. However, the appalling performance has been sustained under this Government. Warning signs were not acted on sooner and contingency arrangements were not in place before the handover on 1 December.

Last month, officials from the Minister’s department confirmed that the Cabinet Office had access to data showing that the backlog of CSPS cases was increasing exponentially during the final months of MyCSP’s tenure. This was known before the transfer, yet Ministers failed to put in place robust contingency plans. They did not require additional resources from Capita ahead of the handover and proceeded regardless, despite being aware that the incoming provider faced a far greater operational challenge than originally anticipated.

The National Audit Office had already found that Capita had failed to meet key transition milestones. The Public Accounts Committee had warned of a clear risk that Capita would not be ready to take over the administration of the scheme and specifically called on the Cabinet Office to fully develop contingency plans before making a final decision. Why, then, did the Government not anticipate this situation as they should have done?

The NAO report highlights a serious issue with the handling of TUPE, the process by which staff transfer to the new contractor. This is meant to ensure continuity by moving experienced staff across with the work, but the NAO notes that the formal TUPE process began only in May 2025, very late in the transition. The consequence is obvious: staff faced prolonged uncertainty about their future, increasing the risk that they would leave before the handover. In a service that depends heavily on experienced personnel, that loss of expertise directly undermines performance. Why was this process started so late and what assessment was made of the risk this posed to service delivery?

The NAO also found that financial penalties were rarely applied under the previous contract and could be waived on the basis of so-called extenuating circumstances. The new contract is supposed to strengthen those provisions, so can the Minister tell the House how many penalties have actually been applied to Capita since go-live, whether any penalties have been waived, on what grounds they were waived and who authorised the decisions?

The Minister in the other place was also asked about standardised mitigation letters for lenders. Members affected by pension delays need clear documentation that they can provide to banks, mortgage providers, landlords and creditors, explaining that their financial difficulty has been caused by administrative failure in the Civil Service Pension Scheme. Can the Minister now confirm whether those standardised letters have been issued? If they have not been, why not? When exactly will affected members receive them?

I ask the Minister about contingency planning. The Statement refers to commercial levers, withheld milestone payments and possible legal remedies. It also refers to explicit personal assurances from Capita’s chief executive, but those assurances were plainly not met. To whom were those assurances made and on what date? What due diligence underpinned them? Who accepted them? Were they set out in writing?

Finally, I am concerned that the department apparently plans to begin a review only in late summer. Why is that timetable considered acceptable? The failures are happening now. There needs to be a credible contingency plan and realistic consideration of future options.

Capita’s failings are unacceptable, but ministerial accountability does not end with condemning the contractor. The contracting authority needs to be relentlessly on the case. This is an issue that I have raised many times previously. Can the Minister tell the House what concrete steps the Civil Service has taken to improve the quality of its contract management? No well-run business would tolerate a contractor performing in such a way, so why should the Government tolerate it?

I appreciate that I have asked a number of detailed questions and that the Minister might want to reply in writing to some of them, but I hope she can shed some light on the concerns raised.

[Lord Pack (LD)]

The Minister may be glad to know that I have a slightly smaller number of questions to ask. Running basic services reliably is at the heart of the Government’s responsibility to us all. Grand promises, fancy manifestos, clever policies or visionary plans about AI mean very little if the basic plumbing of the state is falling apart all around us. Here we have, unfortunately, another failure of that basic plumbing, one with very serious direct consequences for people’s well-being. It is certainly welcome that, faced with another pension scheme going horribly wrong at the hands of Capita, the Government have bitten the bullet and terminated its contract, but that coming after the Civil Service pension contract problems raises two key questions about the Government’s decision-making.

There is certainly a lot of blame to allocate to Capita and MyCSP, but there are also two questions that are fully within the Government’s area of responsibility. One, as I pointed out when we discussed this issue in Questions on 5 February, and as the noble Baroness, Lady Finn, has just touched on, is that the Cabinet Office told the Public Accounts Committee that it was aware of very significant problems with Capita’s preparations to take over the contract on 1 December and that it had a contingency plan ready to use if necessary. Why, therefore, did the Cabinet Office decide to go ahead with the 1 December transfer to Capita rather than invoke its contingency plan? I think it is fair to say that the fact that another Capita pension scheme, the Royal Mail one, has now gone so badly wrong as well redoubles the doubts about why that 1 December transfer was greenlit by the Government.

In addition, in the light of Capita’s failing on these two pension contracts, there is also the problem that the Government have just signed another contract with Capita—a £370 million contract that involves, to quote Capita’s press release from just a few weeks ago,

“tech-enabled back-office services for public servants across four major UK government departments: the Department for Work and Pensions, Ministry of Justice, Home Office, and the Department for Environment, Food and Rural Affairs. Capita will deliver a suite of services including HR, payroll, recruitment, finance, procurement, and service desk support”.

That sounds remarkably similar to the very things that Capita has just got so badly wrong twice.

Warned last year that Capita was getting it wrong, the Cabinet Office pressed ahead with Capita on that 1 December deadline. With Royal Mail, Capita has been getting exactly the same sort of work badly wrong. I hope the Minister will explain why those two failures were not enough for the Government to say for this new contract, “Hang on. We’ve seen your track record, we’ve learned from our mistakes, and no, we’re not going to hand over more money and give you more responsibility for financial IT systems”. Will the Minister tell us what consideration was given to those two other failures by Capita when deciding to award it this new contract? Why were those two failures not considered serious enough for the Government to spend their £370 million—or, I should, say the public’s £370 million—elsewhere?