The Cabinet Office has awarded Capita a £239m contract to manage the Civil Service Pension Scheme for 10 years from September 2025 – almost a decade after the outsourcing giant was ousted as scheme manager and replaced with a partly mutual provider.
Capita said it will use technologies including generative artificial intelligence to improve services. “We are committed to offering seamless, tailored experiences and with generative AI we can deliver new levels of personalisation for all CSPS members,” said chief executive Jon Lewis.
CSPS has more than 1.5m members and includes five defined-benefit schemes, those based on average or final salaries, and one defined-contribution scheme. Work also includes managing the Civil Service Compensation Scheme, Additional Voluntary Contribution Scheme and Injury Benefits Scheme.
Capita managed CSPS until September 2014 when the Cabinet Office transferred it to MyCSP, a company spun out of the civil service in 2012 as part of a drive for more mutually-owned businesses. Following the Cabinet Office selling its 24% stake in 2018, MyCSP is 75% owned by the pensions division of private-sector provider Equiniti with the remaining 25% by an employee trust.
The 2014 transfer was followed by cases of retired civil servants receiving payments weeks or months late and having to call multiple times to resolve problems. According to a 2016 National Audit Office report, civil servants faced "hardship, distress and inconvenience" as a result.
MyCSP expected up to 12,000 items of work-in-progress casework but said it had to deal with a further 40,000 member records from Capita which required manual intervention to solve problems with data. The report said that Capita’s performance running CSPS declined in the six months before the transfer.
PCS, the civil service’s biggest union, criticised the Cabinet Office’s decision to move the management of CSPS back to Capita.
“Privatised payroll and pension services have been a costly failure,” said general secretary Mark Serwotka. “This was another missed opportunity to integrate the processes by bringing the work back in-house.”