Civil Service Pension Scheme: Administration

Jim Shannon Excerpts

Wednesday 4th February 2026 Westminster Hall

[Jim Shannon (Strangford) (DUP)]

It is a pleasure to serve under your chairship, Ms Lewell. I thank the hon. Member for Blackpool North and Fleetwood (Lorraine Beavers). We all owe the hon. Lady a debt for bringing forward this issue, and our constituents would agree.

I have constituents who are close to defaulting on their mortgages without their appropriate payments, and we cannot allow Capita to continue fobbing those people off. I spoke to the Minister before the debate and it is not their fault; it is Capita’s. However, my constituents would say—I hope the Chair will find my language okay—“It is time to kick ass in Capita”. I could say something worse—although I had better not.

[Mr Campbell]

My hon Friend had better not!

[Jim Shannon]

Let me read out an email sent by a lady who worked for almost 50 years in the civil service at His Majesty’s Revenue and Customs. If anyone knows how to work the figures, then this lady does. Yet she is powerless in the face of Capita.

“I joined the Civil Service in September 1977 and retired from it on the 31 December 2025. I worked in the Inland Revenue that then became HMRC. I have not received my lump sum or final details of my pension. I telephoned Capita on the 13 January and after hanging on the line for 2hrs 10 mins (being 12 in the queue) was told by Helen a chaser would be made to processing.

She was unable to let me speak with a manager or processing and confirmed there are issues with logging/registering with the new pensions portal.

I telephoned again today and after hanging on for nearly 5hrs was told by Lilly she would send an escalation today to her manager Adrian. I asked for a call back & whilst Lilly agreed to make this request to her manager she could not guarantee it could be done. I explained I could not get onto the pension portal and she advised the issues with it would not be sorted until March.”

That is the lived experience of a lady who has dedicated almost 50 years of her working life to the civil service—a lady who knew the penalties in place for those who are paid late and who could listen to the extenuating circumstances that someone was going through. I know that the Minister is not responsible but, my goodness Capita needs a throttling.

I have five questions. Why did civil service pensions not postpone the changeover to Capita until the issues with the existing scheme were resolved? When can deadlines for resolving the issues be set? Why was the resolution of the McCloud issues not adequately resourced? When will the remaining contingent decision routes procedures be issued? Will the affordability test be applied to civil service pensions, and if so, when? The affordability test is a clause in the pension scheme allowing it to reduce the pension if it looks like it will become unaffordable. These are the implications of what happens. People can find themselves with a pension that is less than it should have been.

The Government know that the country does not operate without our knowledgeable, hard-working civil servants, but our obligation to them does not end with their final day—it continues. We are failing those who gave so much—and this must end right now.

--- Later in debate ---

[The Minister without Portfolio (Anna Turley)]

It is always a pleasure to serve under your chairmanship, Ms Lewell. I draw Members’ attention to my entry in the Register of Members’ Financial Interests: I have a civil service pension, having started my career in the Home Office in 2001.

It is tradition to thank the Member who secured the debate, but I want to place on record my personal thanks to my hon. Friend the Member for Blackpool North and Fleetwood (Lorraine Beavers) on behalf of my constituents affected by this issue and on behalf of all the constituents we have heard about today. This is a perfect example of bringing to Parliament voices that have not been heard. They have been sat in queues on phone lines, but everyone has brought their stories powerfully to Parliament and the heart of Government today. I thank my hon. Friend for that public service, which is much appreciated.

I thank all hon. Members who have raised issues on behalf of their constituents. It has been troubling to hear those stories, but it is also a testament to the system that an MP can bring the experience and voice of constituents to Government. I also want to thank and pay tribute to all the fantastic public servants who give so much in service to our country and communities.

When a civil servant retires after decades of public service, they deserve a seamless transition into the next chapter of their lives, and recognition of the contribution they have made over their career. They deserve a system that is accurate, responsive and, above all, timely. I state clearly for the record that the service experienced by members of the civil service pension scheme is absolutely unacceptable.

As the 10-year contract was signed by the previous Government in 2023, I could talk about another disastrous inheritance, but I will not. I will take responsibility and apologise because that is what today should be about: the people affected by this service. I have read the accounts of members, many of whom wrote to their MPs. I have seen that correspondence, heard the concerns and listened carefully to the individual cases raised today.

I am deeply sorry for the worry and distress this has caused so many people, particularly those dealing with bereavement, ill health and financial hardship. This is a failure: there are no two ways about it. Resolving it is a matter of utmost urgency for the Government. We are taking direct action to intervene and put things right, doing so as quickly as possible while ensuring accuracy. In response to questions raised by colleagues, I will set out our steps to undertake that.

To understand how to fix this, I want to say something quickly about how we arrived here. As I mentioned, the decision to transfer to Capita with a 10-year contract was made in 2023. The Cabinet Office will undertake a full review of the award and the management of previous pension contracts, as colleagues have asked, once we have resolved the immediate issue of service delivery. I am sure that hon. Members will share our view that the priority is to get people their money and resolve the immediate problem.

On 1 December 2025, the administration of the scheme transferred from MyCSP to Capita. Although the core payroll for 730,000 existing pensioners continues to be paid correctly and on time, the transition for new retirees has been a mess, with a large number of members significantly impacted. The main driver of the delays is the high volume of work that Capita inherited from MyCSP, approximately 86,000 work in progress cases, which was more than twice the volume planned for and anticipated during the due diligence and planning period.

In addition to the work in progress cases, the handover included 15,000 unread email messages. There were delays in loading and correctly mapping the vast amounts of data transferred from MyCSP to Capita. Technical issues were identified in setting up and receiving data interfaces between employers and the new administrator. As of the week commencing 19 January, Capita reporting showed approximately 8,500 recently retired members are waiting for their first monthly pension payment.

Although some of those individuals have now received their one-off tax-free lump sum, the delay in implementing regular pension benefit payments is causing genuine hardship, especially for those relying on their pension payment to pay for basics such as rent, food, mortgages and heating, as we have heard. Shockingly, the report also showed 6,300 open cases relating to deaths, where members have passed and bereaved families are trying to understand and settle financial affairs. I do not underestimate the trauma for many families of having to deal with that. That includes 300 sensitive death in service cases, adding huge financial worries for grieving families, which is simply unacceptable.

Member data is held by employers and fed through monthly to Capita via a secure interface. That enables pension records to be updated for any changes to personal data, employment terms and contracts. A transition of that scale requires the handover of huge amounts of complex personal data. More positively, Capita has now received the data required from the previous administrator. However, the switch of provider means that members are now required to register on a new portal. As colleagues have highlighted, there have been huge problems with the portal.

In addressing all those live issues, we must also understand the complexity of the civil service pension scheme. It is made up of five different pension schemes, and it has approximately 1.7 million members and 320 employers. It is the third largest public sector scheme, and it deals with an average of more than 3,000 retirements and more than 2,700 bereavement cases every month. That is the scale of the challenge.

Let me outline exactly what we are doing to address the problems as quickly and as efficiently as possible. Although it is a corporate failure, the Government are stepping in, and I thank the many civil servants who are working hard 24/7 to resolve this issue. My officials, along with expert colleagues from across the civil service, are working closely with senior leaders at Capita and have agreed a way forward with a full recovery plan. I am grateful to them for their hard work. We have appointed Angela MacDonald, second permanent secretary and deputy chief executive of HMRC, to lead a recovery taskforce. The team is working alongside Capita and departmental leaders to execute a plan organised into intensive three-week sprints.

On resources, we are deploying a 150-person civil service surge team specifically to clear the correspondence logjam. Capita therefore now has more than 650 staff dedicated to this contact, an increase of more than 50% in resourcing compared with the previous provider. Since 26 January, the recovery team has received data on all outstanding cases.

On the transitional help loans, we have authorised Government Departments to provide interest-free bridging loans of £5,000 and, in exceptional cases, of up to £10,000 for those in immediate need. The Department is working to get the money to those impacted within days, not weeks. We are prioritising the most urgent cases. We are working with Capita to ensure that the systems and resources are in place to deal with ill health, bereavement and financial hardship cases, alongside arrangements to clear the backlog. Those cases are our absolute priority.

On the member portal, there was already a plan to roll out greater functionality. That includes “track my case”, which allows members to see the end-to-end progress of their queries; digital requirements processes, which includes the facility for members to track the progress of their retirement application; and a lifestyle modeller, an interactive calculator to help members under the age of 55 to plan for the income they need in retirement. We will provide regular updates on the portal so that scheme members and MPs can see the progress being made to improve the service. I endeavour to ensure updates are made regularly to the House.

We expect to restore service levels for death in service cases and ill health retirement cases by the end of February. I make that pledge to Members. More widely, our current plan is that we are working to bring most aspects of the service back with expected service levels by June, but we will keep that under constant review and continue to look for opportunities to accelerate progress.

[Jim Shannon]

I spoke to the Minister before the debate started, and she indicated that hon. Members might have an access number and an email address. Will she provide those?

[Anna Turley]

I appreciate the hon. Gentleman’s flagging that point, and I was coming to that. I have taken the quite unusual step of bringing a print-out for colleagues, which will be available at the end of the debate and will be shared with colleagues more widely. It has an email address on it. I am keen that hon. Members bring their cases directly to us. Of course, we are addressing the wider issues, but it is a cause of great concern to me that, where cases are raised with Members of Parliament, they should be brought straight to our attention.

The McCloud pension sector remedy work was raised. We know how important it is for the many members awaiting an update. We have agreed a separately resourced project to deliver the remedy with Capita. Many of these cases are very complex, and we hope the majority will be issued by April ’27. We are working with the Pensions Regulator, and we will provide progress updates to the members affected and to MPs.

The new contract with Capita includes a number of key performance indicators, which colleagues have rightly raised, with financial penalties to be applied where they are not achieved. We reserve all commercial rights at present. We have already withheld millions of pounds of payments for failure to meet transitional milestones. We continue to contractually monitor service level key performance indicators linked to payments, and we have refused to waive service levels, ensuring that Capita remains contractually liable for performance.

My right hon. Friend the Member for Hayes and Harlington (John McDonnell) asked whether there was a cause for termination. There is an option to terminate in any contract of this kind. These are complex and commercial requirements, and terminating the contract and moving to another provider would mean another massive upheaval of data and everything else. I am sure colleagues share my view that the priority right now is to resolve people’s immediate concerns and issues, make sure people get their money and undertake a review of exactly what happened. However, everything is on the table. As I said, we will do a full review of these contracts, but our priority is to get people the support that they deserve. It has now been two months since Capita took on the new contract, and we are very clear that members of the pension scheme deserve so much better. Our focus is on taking fast action to resolve the most critical issues for impacted individuals while simultaneously ensuring a detailed recovery plan that brings the commercial contract back within service level agreements as quickly as possible.

I want to reassure every member of the pension scheme that their pension is safe and their data is secure. We are working, and will continue to work, tirelessly with Capita to support the recovery programme until such time as we are wholly satisfied that the service is fully recovered. We are committed to ensuring that every member is treated fairly and with respect, and that no one suffers a permanent financial loss due to these administrative failures. We are holding Capita to account and are going to kick backside, as the hon. Member for Strangford (Jim Shannon) said. We are making sure that members are at the heart of the recovery plan, and we will use every commercial lever at our disposal to ensure that Capita delivers effectively.

I thank all hon. Members who brought the voices of their constituents to the Chamber today. I have brought a handout for colleagues, and I urge anyone with constituency cases to raise them with us. We will do our best to accelerate them, but I am conscious that we have to resolve this matter not just for those who are brought to our attention but for absolutely everyone. We will hold further drop-ins to assist hon. Members and their teams, and we are doing our absolute best to make sure people get their money as quickly as possible. The House has my word, and that of my right hon. Friend the Minister for the Cabinet Office that we will not rest until the service is stabilised and our civil servants receive the support that they have earned after so many years of dedicated service—for which, once again, we thank them.