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Capita civil service pension contract ‘prime candidate’ for insourcing, says government minister

Minister said the government will make Capita pay for the government resources used to support it on pension administration scheme

Karl Flinders
By
Published: 07 Jul 2026 11:30

Cabinet Office minister Nick Thomas-Symonds has said he would insource the civil service pension scheme (CSPS) tomorrow if it was possible, as Capita’s failures continue.

Speaking in the House of Commons, he also said Capita will be made to pay the government for the resources it has provided to the outsourcer in its attempts to get CSPS administration on track.

“This episode highlights the severe limitations of outsourcing the civil service pension scheme,” he told MPs during a debate. “I say openly to the House that if I could insource this operation today, I would do so.”

But he added that if the contract were terminated right away, it could create an “immediate, catastrophic operational vacuum”, stating: “I cannot replace a complex pension operation overnight.”

Thomas-Symonds cited the government’s policy to create “the biggest wave of insourcing of public services in a generation”, and said the civil service pension scheme “could be a prime candidate for insourcing in the future”.

In a letter to civil servants Cat Little, chief operatioong officer of the civil service said the minister "has instructed officials to bring together a broad range of stakeholders and experts to consider, in line with the government's strategy, how scheme members can best be served in the long term, in the delivery of these vital schemes, including the option to insource."

Computer Weekly reported this week that staff working on the botched contract have concerns over data accuracy, data protection and the possible impacts for scheme members.

Thomas-Symonds said: “To ensure full accountability, we are executing our contractual right to deploy independent auditors immediately to conduct a technical review of systems, data integrity and compliance with statutory duties. We are also beginning the process to appoint a remedial adviser, at Capita’s expense, to force rectification directly on the ground.”

In October, MPs will receive a further update on the scheme and the possibility of bringing it in-house.

Thomas-Symonds slammed Capta’s leadership and highlighted failures to implement technology. He said Capita’s CEO, Adolfo Hernandez, had promised that “technological improvements would create a flagship use case for the largest AI-enabled pension scheme in the country”.

But he added that the non-delivery of technology has been a “fundamental part of Capita’s inability to deliver”.

Early warning

As reported by Computer Weekly in October last year, the Public Accounts Committee (PAC) warned the government about the missed IT milestones as being of concern, among other things, which Capita dismissed at the time.

The only way to restore confidence is to strip Capita of this contract and bring civil service pensions administration back in-house.

A couple of months later, on 1 December, Capita took over the pension scheme, which has 1.7 million members, from MyCSP.

But by January this year, an HMRC troubleshooter had to step in to lead an “urgent recovery plan” amid difficulties following the transfer.

The problems continued, with huge delays in paying out pensions, leaving many scheme members in financial distress, including people with no other source of income receiving no pension.

Thomas-Symonds told MPs: “Capita committed to two critical recovery targets: an end-of-April milestone to clear the inherited arrears, and an end-of-June milestone by which point it promised a complete return to standard contractually required levels. Capita missed its own April milestone. The end-of-June deadline has arrived, and I regret to inform the House that Capita has failed to meet that milestone, too.”

Capita said in a statement: “We continue to work at pace to resolve the operational issues in collaboration with the Cabinet Office. Despite the progress made to date, we recognise the service has not been good enough, particularly for members waiting on bereavement, retirement and quotation cases, and we are sorry for the distress and inconvenience experienced by those members. We now have the processes, automation and technology in place to work through the backlog.

“Capita is assessing the implications of the matters contained in the statement and, if required, will update the market as soon as it is able to do so.”

As part of the Cabinet Office pensions recovery taskforce launched in January, a team of more than 140 officials were provided to Capita. “We will recover every single penny of these surge costs directly from Capita, and I will not remove a single member of the team until the service is permanently fixed and fully restored,” said Thomas-Symonds.

He was speaking on the eve of a joint parliamentary committee meeting that will look deeper into the failings associated with Capita’s takeover of the CSPS.

Read more about Capita and the Civil Service Pension Scheme

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