WIREDGOV

The Cabinet Office has not shown that it is able to effectively manage the outsourced administration of the civil service pension scheme. In a report on the 1.7m-member scheme, representing total future liabilities of £189bn, the Public Accounts Committee warns of the government’s currently-limited ability to secure value for money in how the scheme is run.

• Read the report
• Read the report (PDF)
• Read all publications related to this inquiry, including written and oral evidence
• Public Accounts Committee

The PAC report finds that more than half of members affected by historic discrimination who are drawing their pension are facing unacceptable waits for this to be remedied.

The Cabinet Office plans to reach all members by 2027 but has no plan or selected supplier yet to carry out the work to offer a remedy to c.70,000 people who have not yet heard from government on the issue.

This means the government plans to leave some people waiting up to six years from the beginning of the programme to address the discrimination they had suffered before acting to resolve their cases.

The report highlights a failure by government to manage the contracted administrators of the scheme, with customer service levels for members unacceptable since at least 2023.

The Cabinet Office has twice now overseen a fall in customer service levels during the transition from one supplier to another: current administrators MyCSP, and Capita, which is due to take over the £239m seven-year contract in December 2025.

At the time of the PAC’s report, there is a clear risk that Capita will not be ready to take over administration as planned. 

The PAC notes that MyCSP staff who are members of the largest civil service union, PCS, came out on strike this year over the lack of union involvement in the transfer of staff to Capita.

MyCSP does not recognise the union for collective bargaining. The Cabinet Office, as it is not the actual employer, can only advise and support where appropriate, while listing staff retention as a key risk in the transition.

In order to ensure a smooth transition, the PAC is calling for appropriate consideration to be given to the rights of staff members transferring across to Capita.

In the wider picture, the government should explain how it will ensure that its contractors are committed to giving adequate recognition to the voice of employees - for example, through union recognition.

The report also identifies the fact that the market for pension administrators bidding for this contract is small.

This potentially limits the Cabinet Office’s ability to secure value for money for the scheme through a competitive process to find its preferred supplier. The PAC asks that government set out its consideration of the benefits and costs of administering the scheme in-house.

Chair comment

Sir Geoffrey Clifton-Brown MP, Chair of the Public Accounts Committee, said: 

“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.

"For value for money to be in question in the administration of this scheme; for members to be kept waiting years for age-related discrimination within the scheme to be remedied; for the Cabinet Office to successively fail in its management of the contract for the scheme as it shuttles between suppliers – this is an indictment of a system that should be invisibly run for the benefit of public servants who deserve security following their retirement.

“Our report also provokes wider questions on whether the government is doing enough to ensure that suppliers receiving public money are doing enough to make sure the voices of employees are heard.

"There may be structural reasons for the lack of union recognition by MyCSP. However it will seem odd to many that the civil service pension scheme administrator did not recognise the civil service’s largest union, and it is positive to hear that Capita have agreed to move towards recognition with PCS.

"Given the performance of the scheme in the past as it has shuttled back and forth between different administrators, and equivalent risks identified in the future by our Committee’s report, it is time for the government to publicly take stock.

"The costs and benefits of bringing the scheme back in-house must now be laid out. Whatever route is taken in the future, the status quo has long clearly not been good enough.”