PARLIAMENTARY DEBATE
Pension Schemes - 22 April 2026 (Commons/Commons Chamber)
Debate Detail
The security and dignity of those who have dedicated their careers to our public services are not negotiable, and they deserve a pension service that is reliable, efficient and secure. For those principles to be more than just words, they need to be underpinned by rigorous accountability and a refusal to accept second best. We recognise that for our public servants, these services are the foundation of their financial security. When the standards they deserve are not upheld, the Government will not hesitate to act decisively to protect their interests. It is in that context that I want to give the first update to the House on the Royal Mail statutory pension scheme.
Following a failure to meet critical transition milestones and a lack of confidence in Capita’s ability to implement and transition to the new operating model in a timely fashion, I am announcing today that I have terminated the new Royal Mail statutory pension scheme contract with Capita. Capita had an 18-month planning window to prepare for the transition. It failed to deliver numerous milestones, including a failure to implement the required IT automation. The Cabinet Office repeatedly flagged delays in transition milestones and that IT automation, ultimately issuing formal correspondence to reaffirm the mandatory requirements. To ensure members are protected, we will ensure continuity of the existing contract, but let the message be clear: I will not and we will not tolerate delivery failure from contracted partners. Public services require high-quality delivery, and public money should not be used to fund performance that falls short of the standards we expect.
I also want to address problems in the administration of the civil service pension scheme. The transition process from the previous provider, MyCSP, was not satisfactory. We are investigating the respective liabilities for those failures as between Capita and MyCSP. Given the criticality of these services, the Cabinet Office permanent secretary and I discussed transition with the chief executive officer of Capita. We sought and were given explicit personal assurances that the transition would be handled with the utmost care and that any backlogs would be managed effectively. I am sorry to say that those assurances have not been met.
It is clear in any event that the delivery of the service to civil servants since the transfer on 1 December last year has fallen far short of the required standard. The delays that civil servants have faced in accessing their civil service pensions are unacceptable, especially in view of their many years of dedicated public service. That is why I established a specialist pensions recovery taskforce, led by the second permanent secretary at His Majesty’s Revenue and Customs, Angela MacDonald, to take strategic oversight of the scheme’s management. That intervention, which includes a circa 140-person Government surge team to bolster operational capacity, is delivering results, including helping Capita to clear 15,000 inherited unread emails. Telephony wait times that averaged more than 90 minutes earlier this year have been successfully brought down to an average of under two minutes.
The stories we have heard of members missing mortgage payments and falling into hardship are distressing and entirely unacceptable. No one should have to face such financial anxiety after a lifetime of dedicated public service. That is why I took immediate action to ensure that no member was left to face these challenges alone while these service issues are being resolved. To mitigate the impact on those most affected, we have already provided more than £7.2 million in interest-free transitional support loans to more than 1,300 members. We are proactively driving the uptake of those loans to ensure that no member in need of support is missed, and I encourage all hon. and right hon. Members to ask their eligible constituents to reach out to their civil service employers for these loans, so that we can provide the vital support they deserve.
I can tell the House that Capita was explicitly instructed in July 2025 to prepare for the volumes it is now seeing. It knew the scale of the challenge, but failed to deliver the IT automation and portal functionality required when the service went live. The result, I am afraid to say, is a backlog of around 24,000 outstanding pension quotations. There is also a backlog of more than 1,500 open MP complaints. That is totally unacceptable. I have instructed officials to speak to Capita about how we can ensure that MP correspondence is dealt with quickly and efficiently, noting the importance of the fact that Members across the House were speaking up for their constituents. These are not just numbers on a spreadsheet; they represent thousands of individuals who are unable to plan for their futures or retire with dignity.
Service delivery is about more than just speed; it is also about the absolute security of member data. The breach we saw on 30 March, which saw personal information compromised on the pension portal, represents a fundamental failure in data protection. To be clear with the House, I will not tolerate these lapses. The Cabinet Office has formally notified the Information Commissioner’s Office of this breach, and we have written formally to the chief executive officer of Capita to demand a full technical account of this failure and a guarantee that it will not happen again.
Across the civil service pension scheme, we have taken direct action on all commercial levers. We are withholding milestone payments where deliverables have not been met, and we reserve every right to take further formal action. The Cabinet Office has mandated a clear recovery target on service levels. Capita must clear all inherited arrears by the end of this month and restore service levels to standard, contractually required levels by the end of June this year. We will continue to use every commercial lever at our disposal to ensure that these standards are met.
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.
While I appreciate being given advance sight of today’s statement, it does seem that the Minister, particularly in regard to the civil service pension scheme, has come to the House with more of a plan than a statement. It is clear that the current situation, as the Minister said, is the culmination of a series of entirely unforced errors by Capita. Its failure to adequately administer the CSPS has caused significant financial distress to thousands of former public servants, such as my constituent Chris. He has found himself without the pension he was relying on at just the time that his wife has had to step back from work after a cancer diagnosis.
These people worked hard and planned responsibly for retirement, on the basis that the CSPS would be there for them when they needed it. Capita’s failures have left them anxious, frustrated and, in many cases, desperately out of pocket, but in all too many cases that I am aware of, Capita has been utterly unresponsive. Sadly, the constituents and others from around the country who have contacted me about Capita simply would not recognise the Minister’s claim of answer times being down to two minutes. This is not the way to reward a career of dedicated public service.
Last year, the National Audit Office highlighted that Capita had failed to meet three of the six key transition milestones that had been due by March 2025. All those milestones related to scheme design and operational readiness. In October last year—two months before Ministers had to make a final decision on the transition to Capita—the Public Accounts Committee noted that Capita had missed milestones to deliver its IT systems. The Committee called on the Cabinet Office to fully develop contingency plans before making a final decision about whether Capita should take over administration on 1 December last year.
The Minister’s Department confirmed that—four months after the transition was completed—Capita had still not met three transition milestones, while one was only partially met It is only at this point that the Minister has brought forward the contingency plans—the same contingency plans that the Public Accounts Committee recommended months before—but the warning signs were there, and they should have been clear and obvious. Despite that, last November, a full year and a half after the Government took office, they wrote to trade unions, confirming that Ministers were pressing ahead with Capita’s contract..
We all agree that it is in everyone’s interests that the operational stability of the CSPS be restored as quickly as possible. After all, Capita won the contract because of the failure of the previous MyCSP contract, and clearly a further change would mean more disruption, causing further harm to those who have already been so badly impacted. Ministers must ensure that Capita meets its contractual obligations consistently, and that any penalty clauses in the contract that can be enforced are enforced, to allow compensation to be paid.
The Minister has some questions to answer. For those who are missing out because of Capita’s failings, will the Minister unequivocally commit to delivering a functioning service in the timeframe that he has set himself? Will he confirm that his Department has delivered the standardised mitigation letter that CSPS members can share with lenders to explain their temporary financial difficulties? That was promised last month; has it been delivered? I understand that there will be a commercial session on 28 April to discuss the penalties that Capita is facing, and what officials have called the “wider commercial position”. Will the Minister be attending in person? Will he commit to updating the House at the earliest opportunity, following that meeting? Will he elaborate on exactly what his officials mean by Capita’s “wider commercial position”?
Finally, and most importantly, what contingency plans has the Minister put in place in case it becomes necessary to terminate Capita’s contract for the CSPS, just as he has today terminated its contract for the Royal Mail scheme?
The shadow Minister talked about not meeting milestones; I can assure him that milestone payments have been withheld, and I will not hesitate to use the commercial levers in the contract to drive performance. I am absolutely clear about the restoration of service by the end of June; that is what I am holding Capita to. He also talked about MyCSP. I have said that we are reserving rights under both these contracts, with regard to the backlog that was left by MyCSP and how Capita has dealt with it since. In relation to MyCSP, there is also an option to pursue a parent company guarantee, and he can be assured that I will explore all possible legal options to ensure that the service that public servants rightly deserve—not just in retirement, but in very difficult circumstances, such as death in service—is being provided sensitively.
The shadow Minister asked about forthcoming meetings and updates. I will consider the appropriate steps to take, and will update the House, and Members from across the House when they write to me.
We have had so many assurances on this. Are the June assurances really going to be kept to? This is not a one-off issue, is it? The civil service pension scheme has had at least three different problems with three different providers in the past. We have had the teachers’ pension scheme, the Royal Mail pension scheme—an awful lot of them. We asked the Cabinet Office permanent secretary whether she would go away and look at having an in-house team built up to administer public sector pensions in a way that might prevent these recurring problems with a variety of private sector providers, whose arrangements always seem to go wrong.
My constituents would like answers to the following questions. How many people on the civil service pension scheme, as of now, have not received payments that they should have had? Why should taxpayers be paying for the surge in His Majesty’s Revenue and Customs staff? A hundred and forty staff have come in to sort this out. Surely Capita should be paying for its incompetence. What is the timeline for Capita to clear up all inherited arrears, and is it prioritising hardship and bereavement cases? With regard to the Royal Mail pension scheme, now that Capita has been terminated, what is the plan?
With regard to the Royal Mail statutory scheme, as I have said, we will now ensure continuity of service, because that is very important. I think the hon. Gentleman will see that I have been very decisive on the future of that contract today. We will look at a range of options for that, but continuity of service is obviously a priority in the short term.
It was outrageous that the civil service scheme was given to Capita after its failure on the teachers’ pension scheme, its failure with regard to the NHS data releases, and the failure on the military contract. This failure has affected so many civil service pensioners. It has caused real harm, suffering and stress. It is equally outrageous, I have to say, that its performance has not warranted the removal of the contract altogether. The Minister has today terminated the contract with Royal Mail. Why has he not terminated this contract?
My hon. Friend the Member for Sheffield South East (Mr Betts) raised the issue of the preparation of in-house provision of the civil service pension scheme. The Minister did not refer to those preparations. Will he meet the trade unions and discuss how we bring the administration of the civil service pension scheme in house, because as sure as night follows day, Capita will fail on this contract, as it has done on every other?
I thank the Minister for his decisive action in terminating the contract for the Royal Mail pension scheme, and for the ongoing work that he is doing with regard to the civil service pension scheme. He has flagged that there are hard-working public servants who have given their service to the state for many years, and who have been failed when they have looked to retire and to get their pension benefits. I hope that he will hold Capita’s feet to the fire; many of us will be keeping our eyes on the Minister as he does. Will he prioritise those who are entitled to bereavement payments under the death-in-service part of the CSPS? This is a very difficult time for them, and they may not have actually been employed; it is dependants, and sometimes children, who are entitled to these payments.
I am sure the Minister agrees that people find it extremely worrying not to be able to plan for their retirement and understand what is ahead of them. Does he agree that this situation is completely unacceptable? Can he outline what quick action will take place to hold Capita to account, bring about improvements and ensure my constituents can look forward to their well-earned retirement?
My hon. Friend is absolutely right about the poor performance under this contract. I have taken a decision to terminate the contract for the Royal Mail statutory pension scheme, and she and Members across the House can be assured that, under this contract, we will robustly be holding Capita to account. As she rightly says, when people have missed mortgage payments or other things have happened to them through no fault of their own, that is completely unacceptable.
I welcome the action the Government have taken and the Minister’s statement today. I thank him for his engagement with me over the past six months. It is clear that Capita has shamefully failed many Portsmouth North civil servants. Kirsty is still waiting for ill health compensation. Christine is waiting months for her widow’s pension payments. Louise submitted request forms and, since November, has heard nothing. Anne, after 48 years of public service and following the sad death of her husband, has been unable to get any clarity on her pension forecast. These are not numbers on a spreadsheet, but real people and real lives. On behalf of these women, I ask the Minister: when will the civil service pension scheme finally be stabilised?
I say to my hon. Friend and those four constituents that what I have said in the recovery plan and what is part of the recovery plan is for the contractual level of service to be back by June. If that is not delivered, I reserve all rights under this contract with Capita.
I thank the Paymaster General for his statement, which is hugely important to residents of Harlow, including veterans and those who have worked tirelessly over the years in the postal service and the civil service. In one of my previous roles working for a homelessness charity, I have seen the devastating effect that late pension payments can have on people’s lives. We should not forget the human impact of these issues. My hon. Friend the Member for Sheffield South East (Mr Betts) recognised the issues with teachers’ pensions. My constituent, Carol, constantly comes to speak to me about the issues she is having with her teacher pension. I recommend that the Minister looks at that as well. What will the Paymaster General do to ensure we get these pensions right and to hold Capita to account, and will he consider insourcing these pensions if necessary, to show that this Labour Government are on the side of hard-working pensioners?
I am afraid to say to my hon. Friend that I cannot help him with the results of Harlow Town!
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