The Cabinet Office has sold its 24% stake in the spun-out civil service pensions administrator MyCSP for £8m, the joint venture’s partner business has announced.
Equiniti Group, which provides administration and payment services for a range of public and private-sector organisations, already owned 51% of MyCSP, with the remaining 25% belonging to staff through an employment benefit trust.
Equiniti’s acquisition of the Cabinet Office’s stake in the venture was announced in parallel to the extension of MyCSP’s contract with the department to provide pension administration and related services for the civil service until December 2021.
MyCSP currently looks after the pensions arrangements of around 1.5m current and former civil servants as well as providing pensions administration services to the House of Commons, the Forestry Commission, BAE Systems, the BBC, and the NHS among others.
It was the highest-profile example of public-sector spin-outs following the “mutuals drive” of coalition-era Cabinet Office minister Francis Maude. It was set up in 2012 and took over pension and payroll services previously provided by Capita in 2014.
However the organisation ran into difficulties with late payments to thousands of pensioners, caused by issues stemming from the introduction of a new pension-administration IT system called Compendia and low staffing levels.
A National Audit Office report in 2016 said it had identified "dozens of individual stories of hardship, distress and inconvenience" caused by late payments and that the administrator had failed to answer almost 100,000 calls from concerned scheme members between September 2014 and March the following year.
MyCSP chief executive officer Matt Thurstan said that the Cabinet Office’s contract extension – announced today – was a “great achievement” that was testament to the organisation’s current “complete focus on the member and employer experience”.
“Since MyCSP was established, we have made significant investment in both our technology and our employee partners and we remain committed to greater investment to enable us to further enhance member and employer experience, both for current and future clients,” he said.
Equiniti chief executive Guy Wakeley said that investing further into the joint venture was in line with the business’ strategy and that it was “committed” to enhancing employer and member services.
A Cabinet Office spokesperson said the government’s share sale would not affect the services offered by MyCSP to pension scheme members, or the benefits they received.
“By taking the opportunity to sell our shares in MyCSP to Equiniti, we have raised £8m for the taxpayer,” they said.
“MyCSP was established as a company in 2012, jointly owned by its employees, Equiniti and the government, and has since improved services for pension scheme members and delivered millions of pounds of savings to the taxpayer.”
The Cabinet Office said that it intended to run a competitive tender for the contract to administer the Civil Service Pension Scheme when the current contract expired in December 2021.
It added that the timing of the share sale had been “driven by a desire to make sure there is a robust market for tendering the new contract”.
This story was updated at 17:15 on 27 September 2018 to add comments from the Cabinet Office