The Personal Accounts Delivery Authority (PADA), which was created by the government to administer pension schemes, expects to cut its software development costs after agreeing a deal with Tata Consultancy Services (TCS).
PADA will award TCS the contract to administer the National Employment Savings Trust (Nest) pension scheme designed for low- and middle-income citizens. Nest was set up after the government decided not enough people were saving for their old age.
PADA hopes to sign the deal with Indian firm TCS by 15 March.
A spokeswoman said Nest will use existing TCS systems. "TCS already administrates lots of this type of scheme and we are not building a bespoke IT system from scratch," she said.
The data will remain in the UK, as will front line customer services.
But TCS will carry out software development offshore. Some 60% of the total workers involved are expected to be in India, with the remainder in the UK. TCS will store data in the UK and make it accessible from India under strict control.