Capita-run civil service pension scheme leaves retirees in limbo

Some former state employees across the country have been left with no income this month after the company managing civil service pensions failed to pay them.

The Civil Service Pension Scheme, which manages the pensions of 1.7 million public sector workers in the UK, has been unable to provide lump sums or regular payments to many people since Capita took over the administration of the scheme in December.

Capita said it had been left with a much bigger backlog of cases than originally agreed and apologised to those affected.

One retiree, Steve Duell, told the BBC he would have to borrow to pay his bills if he does not receive his pension by the end of the month.

The 65-year-old from Hull retired on 1 January after 40 years at the Land Registry.

He should have received a lump sum shortly afterwards but has received no information at all about his retirement package.

Steve said he made numerous attempts to contact the administrators, including spending nearly 15 hours on the phone on hold.

“We’ve got no money, and we’ve got lots of financial commitments.

“We need to pay off car loans and make mortgage payments.

“We arranged to get building work done on the house, on the basis of expecting a lump sum at the start of January,” he said.

The outsourcing services firm, Capita, took over the contract in December after a lead-in time of two years. It administers pensions for public sector institutions including HMRC, the MoD, the Welsh government, the Scottish government, Transport Scotland, the Crown Prosecution Service, Defra and the Foreign, Commonwealth and Development Office.

Paul McKenna, from Liverpool, spent most of his working life working with the Inland Revenue and HMRC.

Now aged 59, he planned to retire early on health grounds, after having a heart bypass operation. He gave the required five months’ notice to start his pension, before finishing work on 30 November.

He had hoped to use his lump sum to pay off his mortgage, then live off his pension payments, but is still waiting.

“The worry has been affecting my sleep, it’s bad for my angina.

“I’m supposed to be getting married in September, but this has left me with lots of uncertainty,” he said.

When he telephoned he waited for an hour on hold before being given the message: “The building is on fire and we’ve had to evacuate.”

He said that happened twice, before getting through, only to be told his case was with the “resolutions team”.

Capita has previously faced criticism over their management of teachers’ pensions in England and Wales, and has lost that contract to rival Tata.

Until the end of November 2025, the Civil Service Pension Scheme was administered by a company called MyCSP. The contract was taken over by Capita on 1 December, in a seven-year deal worth £239m.

Capita launched a new online portal, for customers to access projections of their expected pensions and lump sum payments. But the portal launch was plagued with problems.

In a statement to the BBC, Capita said that when it took over it had expected a backlog of 37,000 cases, but the actual number of outstanding cases was 86,000. Capita says it now has more than 500 people working on the project, double that of the previous provider.

“Our teams are working tirelessly to clear the backlog we inherited and resolve member queries as quickly as possible. We sincerely apologise for the inconvenience caused to our members,” the firm said.

Parliament’s Public Accounts Committee warned in October that Capita would not be ready for the planned takeover.

Committee chair Sir Geoffrey Clifton-Brown said at the time: “It is deeply frustrating for this committee to be scrutinising an issue that ought to be as seamlessly run as civil service pensions.

“Scheme members who have dedicated their careers to public service ought to be secure in the knowledge that it is under sound administration.”

Responsibility for managing the administrator contract rests with the Cabinet Office. A Cabinet Office spokesperson said it remained “committed to working with Capita to ensure the scheme’s success and [to] safeguard the interests of all members.

“We are aware of the issues some members have faced and we have instructed Capita to fix them urgently,” the spokesperson added.

“We have been assured that Capita is rolling out targeted fixes to better meet the demands of members and employers.”

Fran Heathcote, general secretary of the PCS union, which represents civil servants, said: “This fiasco is extremely distressing for those who have worked and paid into their pension all their working lives.

“We believe that this work should be run by the civil service, under ministerial control, so that it can be properly resourced and pensions paid on time.”