Outsourcing giant Capita has admitted its handling of the civil service pension scheme has “not been good enough” as shares in the firm slumped after a cabinet minister launched a scathing attack on its contract failures.
The company apologised for delays in administering the 1.7 million member pension scheme, which has left thousands of civil servants waiting for payments and retirement quotes.
Minister's criticism and potential insourcing
Cabinet Office minister and Paymaster General Nick Thomas-Symonds told the Commons on Monday that Capita’s contract was a “prime candidate” to be brought back under Government management, though he ruled out the move in the immediate future. He pledged to recover “every single penny” from Capita after the Government has been forced to parachute in a 140-strong team of civil servants to help clear the backlog of work, including over 4,000 outstanding bereavement cases.
Shares in Capita tumbled as much as 16% in Tuesday morning trading as the contract issues hit the stock.
Capita's response and backlog details
Capita said: “Despite the progress made to date, we recognise the service has not been good enough, particularly for members waiting on bereavement, retirement and quotation cases and we are sorry for the distress and inconvenience experienced by those members.” The company added that it now has “processes, automation and technology in place to work through the backlog” and is assessing the implications of the matters contained in the statement, with a trading update expected later this week.
Mr Thomas-Symonds said a move to insource the pensions contract hastily could disrupt payments as he acknowledged calls from MPs to bring it back in-house, but did not rule out “further interventions” as he hit out at the “corporate failure (and) empty promises” faced by scheme members. He told MPs on Monday there were more than 6,700 quotations for past retirement dates and 4,100 bereavement cases outstanding.
Government action and union calls
Public sector union Prospect has also joined calls for Capita to be “stripped” of the pension contract, which was signed by the previous Conservative government in 2023. Capita was given a deadline of June 30 to deliver the terms of the £239 million pensions contract after failing to meet targets. The Government has withheld nearly £10 million in payments to Capita for its poor performance over the Civil Service scheme.
A similar Capita contract for the Royal Mail pension scheme was terminated by Labour in April after numerous failings and a botched transition.
