The Cabinet Office has terminated Capita's contract for the new Royal Mail statutory pension scheme, citing a failure to deliver critical transition milestones and a lack of confidence in the company's ability to implement the new operating model. Minister Nick Thomas-Symonds announced the decision in the House of Commons on Wednesday, stating that Capita had an 18-month planning window but failed to deliver numerous milestones, including required IT automation.
Thomas-Symonds emphasised that the security and dignity of public service pensioners are non-negotiable, and that the government will not hesitate to act decisively to protect their pensions. He assured Royal Mail pensioners that efforts are being made to ensure continuity of service following the termination.
The minister also highlighted ongoing issues with Capita's management of the Civil Service Pension Scheme (CSPS), which it took over in December. Members have experienced delays in receiving payments, with a backlog of 24,000 outstanding pension quotations and 1,500 unresolved complaints by MPs. Thomas-Symonds described the financial impact on members as unacceptable, noting that some have missed mortgage payments and faced hardship.
A data breach affecting CSPS members in late March was also flagged as a fundamental failure in data protection. The Information Commissioner's Office has been informed, and the Cabinet Office has written to Capita's chief executive demanding an account of the failure. The government is withholding milestone payments where targets have not been met.
Capita has offered to cover the costs of a government surge team sent in to bolster operational capacity, a proposal the minister is considering. The government has already provided £7.2 million in interest-free transitional support loans to over 1,300 members. Thomas-Symonds stressed that the delivery of service to civil servants has fallen far short of required standards and that Capita must clear all inherited arrears by the end of this month and restore service levels by June.
