The service currently being provided to members of the Civil Service Pension Scheme is “utterly unacceptable”, Cabinet Office minister Nick Thomas-Symonds has said.
Yesterday morning, Cabinet Office permanent secretary and civil service chief operating officer Cat Little and Capita boss Adolfo Hernandez issued a statement apologising for “serious issues” affecting scheme members. They also set out an action plan to tackle the crisis, which includes setting up a hardship fund, prioritisation of cases, and the civil service surge support.
Appearing at the Public Administration and Constitutional Affairs Committee yesterday afternoon, Thomas-Symonds and Little were asked what had triggered the letter and for the next steps the Cabinet Office would be taking.
Thomas-Symonds said: “Before I come to the details I should say openly at the outset that the service – or lack thereof – that is being provided to people who have worked many years and given their lives to public service is completely and utterly unacceptable.”
The minister said key issues have included newly-retired people not being able to access their pensions, delays to quotes, inaccurate quotes, and incomplete details when people login to the portal.
“Our priority now is dealing with this issue of the immediate hardship and problems that have been caused to people,” he said. “That’s why I’ve signed off the hardship loans.”
Thomas-Symonds said Capita inherited “a very significant backlog” of around 86,000 cases from MyCSP on 1 December, when the administration of the scheme switched to the consultancy giant.
But he added: “I think Capita have subsequently said that they underestimated the complexity of the scheme, which may be one of the explanations as to why we find ourselves in the position that we do.”
The minister also noted that the Cabinet Office’s “contractual rights are being reserved” under both the current contract with Capita and the previous one under MyCSP, the suggestion being that the department may seek penalty payments from both firms for contract failures.
Thomas-Symonds said he is meeting Capita chief Adolfo Hernandez on Thursday to “once again set out not only the unacceptable situation that people are facing that are seeking to use this scheme, but also what we will be doing and our expectation going forward”.
He added: “Our priority now is dealing with this issue of the immediate hardship and problems that have been caused to people. That’s why I’ve signed off the hardship loans, and I think getting a grip of this is the priority now.”
Getting pensioners their first payment is ‘priority number one’
Giving further details on the recovery plan, Little said that “three sprints are being undertaken by our taskforce”, with the first focused on making sure pensioners who have retired in recent months get their first pension payment.
On average, around 3,000 civil servants retire each month, Little said.
“Many of those will not have received their first pension payment,” she said. “So that is priority area number one. Also prioritising anyone who has had a recent bereavement, anyone who has retired on ill health. We will prioritise the most extreme and urgent cases as quickly as possible and we expect for those cases to be stabilised and dealt with by the end of February.”
Little said the government doesn’t yet have a good estimate of how many people are in financial hardship, but it knows that around 8,500 members of the scheme “will have some sort of issue with their payment” since 1 December.
“I can’t tell you today how many are suffering financial hardship, but given most people rely on a pension to be paid we can imagine it will be a significant number,” she said.
The hardship loan, which will be interest-free and issued by departments, is at a standard level of £5,000, with exceptional access to up to £10,000 for people who need more money,” Little added.
The Cabinet Office has budgeted for the maximum – if all 8,500 sought the hardship loan maximum of £10,000, it would amount to £85m.
Asked about compensation, Little noted that there is an existing compensation scheme within the pension contract for people “who suffer because they’ve had to make decisions or had to access emergency funds that have high levels of interest rates”.
The second sprint will move onto the wider issues and the large number of outstanding queries. Little did not give a timeframe for this sprint.
“We must get back to people so that they’ve got the answers that they need to be able to undertake big life decisions,” Little said. “These are often stressful and difficult choices that people are trying to make and they need the information from our pension scheme to be able to make those life choices.”
The third phase will focus on technical issues with the portal and website and run until the end of March, she said.
On the portal, Little said there is information “that we need to make sure is connecting between the previous service and the one we’ve got now”.
“We’ll also be looking at website functionality and the use of technology to make it easier for people to access their information,” she added.
Little: ‘No ill will’ from Capita
Little said the scheme had been “in distress” for years under MyCSP, with the Cabinet Office twice fining the firm over customer service failures. However, she said “it became very, very visible in the first week of January that there was a more significant set of issues to be dealt with” as the number of complaints began to significantly increase.
“This is not a new issue,” Little said. “The reason that I took the action to get in touch with all scheme members through any means possible today is because I sincerely believe that the scale and the level of hardship that people are enduring is just not good enough.”
Little said one of the “big challenges” since the transfer has been the system for Capita to keep the Cabinet Office updated on progress, as the management information has to be manually produced by the administrator.
“That inevitably has led to us having to reconcile information that we hold with Capita in order to get a grip on the situation,” she said. “So the first thing that my teams have had to do is to understand exactly what the performance of Capita has been, because that information has been slower and harder to get a hold of than we would like.”
Asked by PACAC chair Simon Hoare if Capita had “deliberately” provided this information slowly, Little said Capita has been “absolutely open to every single suggestion… from the start”, providing regular updates on an almost daily basis.
“And certainly before we transferred the contract, they were very open with myself and the minister for the Cabinet Office on the scale of the challenge,” she said. “And so I don’t think there is any ill will on the part of Capita.”
Asked if there was a full worked-through transition plan when the Cabinet Office awarded the contract to Capita, Little said there had been but that the estimate of the work-in-progress backlog was “significantly lower” at that time.
Little also said she did not believe MyCSP had withheld information on the state of the backlog, which rose from 37,000 cases to 87,000 over the roughly six-month period from Capita winning the contract to the transition on 1 December.
“As we got into the transition, and when you start these very large commercial handovers, it became clear that the backlog was closer to 87,000,” Little said. “So at no point has this been about MyCSP withholding information. It’s that the assumptions the new provider made proved to be untrue by the time they actually took over the service.”
Explaining why the backlog worsened over that period, Little added: “Sadly this is not unusual where a service is handing over to another provider. You often find that staff leave and [MyCSP] found it very difficult to maintain service levels.”
Asked if Capita are now saying, "this is not what we signed up to?", Little said: “They are saying to us “it isn’t what we signed up to, but we are going to do everything we can to get that backlog down and under control”.
Little added that the longstanding issues with the administration of the scheme under MyCSP was “part of our decision to transfer to a new provider, in the interests of seeking to improve customer service and better technology”.
She also noted that the market for pension schemes is “fairly limited” and “these are complex, very large schemes”, with the Civil Service Pension Scheme “one of the largest and most complex schemes that we have in the country”.
The perm sec also confirmed there would be a “very thorough” lessons learned exercise, adding that she welcomes scrutiny from parliament on the transition. Little will appear again before the committee on 10 February, and has agreed to give a further update to MPs at that session.