Capita has missed seven transition deadlines for its takeover of the administration of the Civil Service Pension Scheme from MyCSP.
Cabinet Office permanent secretary Cat Little told MPs yesterday that, of the 12 transition milestones built into the contract with the outsourcing giant, eight are due and only one has been delivered fully on time.
Little, who is also the Cabinet Office permanent secretary, said the situation is a “significant cause for concern” and that the status quo will remain in place until the Cabinet Office is “confident” that Capita is ready to take over the contract.
The update, given to MPs on the Public Accounts Committee, follows an NAO report on the administration of the scheme, published last month, which noted that the Cabinet Office had withheld £9.6m in transition payments after Capita missed three key milestones for its takeover of the contract.
Little said each of the milestones have “quite a range of different work packages that sit beneath them” and so “for the whole milestone to be achieved, you've got to have a huge amount of activity undertaken”. She added: “Obviously we're disappointed that a number of those milestones were late.”
She said the main reason for the milestone deadlines being missed is that “Capita probably have underestimated some of the complexity of the transition, and the technology has taken longer to implement”.
Capita is due to take over the administration of the Civil Service Pension Scheme from MyCSP in December this year, after being awarded the contract in 2023. The firm previously administered the scheme’s pension payroll services and deferred member administration until 2014, when it moved to the current operator, which has recently faced criticism from the NAO over its handling of the scheme.
Little said the Cabinet Office is now “working very, very closely with Capita on how we quickly get a new delivery plan with realistic dates in place”.
“We have built in a number of things to incentivise a smooth transition, but we are at a point where the risks are high, and there is a lot more work we need to do to give you fully the confidence at this stage,” she added.
By the end of July, Little said the civil service expects to be able to make a much more realistic assessment of the transition, “because obviously the fact that we are so unaligned on a number of these deliverables does give us quite significant cause for concern”.
Asked if the Cabinet Office has contingency plans if Capita’s IT systems are not ready by December, government chief people officer Fiona Ryland said there are “robust” back-up plans in place, with one option to including a more gradual roll out of the Capita technology.
She said that under this arrangement, Capita would focus on “the technology that makes the most difference to the member service to start with”.
Sir Geoffrey Clifton-Brown, chair of PAC, raised concerns of “déjà vu” with the transition from Capita to MyCSP in 2014.
He said: “I have been back to the NAO’s report in 2016, referring to the transition from Capita in 2014. Exactly the same thing has happened. There was a rundown of the outgoing provider of staff not doing the job as they should have been doing in the run up to the handover, and the people receiving the contract getting into difficulties. How do we know that the situation is not going to get worse this time? We do not seem to have learned the lessons from last time.”
Responding, Little said: “We simply cannot afford for this transition not to go well. We have heard a lot in this hearing about the challenges to our staff and members and the complexity of the arrangements under way, so it simply would not be acceptable for us to transition to Capita if we were not ready. That is why we are making sure we learn the lessons and make changes to the way in which we transition.”
Little said this includes the ability to withhold up to 10% of funding as a penalty if the required service levels are not achieved within three months of Capita taking over the contract.
She said there would also need to be a “a go/no-go moment” and that Cabinet Office “will not transfer from the current arrangement if we are not ready or confident to do so”. Little said that, in the worst case scenario, “the scheme will continue as it is today”.
“I am not going to sit here and tell you I am confident that it is going to deliver the remaining four [milestones], because at this stage we are not," she added. "We need to sit down with Capita and agree what the realistic deliverable plan is, and then in September we need to go through go/no-go.
“If we are not ready to make that transition, we will not make that transition. We will go to our contingency plans.”
Little said the contingency plans are “extensive so that we have a number of options to fall back on so that we do not have deterioration of the service”.
Little said the worse case scenario will see “the scheme will continue as it is today", while in the best case scenario, "it will transfer, we will get better technology in place and we will gradually make some of the improvements that we need to make".
She added: “I am very happy to commit to scheme members that we are going to do everything we can to maintain current service provision.”
A Capita spokesperson said: "Capita is proud to be working in partnership with the Cabinet Office to modernise the administration of the Civil Service Pension Scheme from December 2025."
Referring to last month's NAO report, they added: "While the NAO report reflects the status of our transition to scheme administrator in May, we have since met the referenced milestones and are on track to deliver enhanced, innovative services for members for when the contract commences. We remain committed to offering seamless, tailored experiences to all CSPS members."
In written evidence to the committee, published yesterday, Capita said it is "is firmly on track to assume full administration of the CSPS" from 1 December. It said all business processes will be operational by this date and that members will receive "an improved operational service" from this point onwards.
Evidence provided by the PCS union, meanwhile, called for the scheme's administration to be brought back in-house. The union, which is in dispute with MyCSP over its lack of recognition, said it is "firmly of the view that where the PCSPS administration is concerned, the outsourcing model has failed, and urgent consideration should now be given to bringing the administration of the pension scheme back in-house".
At the PAC session, Little also addressed concerns over recent issues with the administration of the scheme under MyCSP, which have seen complaints rise to a nine-year high.
Asked why complaints have soared, Little this was "clearly unacceptable" and that there were three key reasons: the McCloud remedy significantly increasing the complexity of the work that the scheme is handling on behalf of government; an increase in volume and demand; and peformance challenges.
Duncan Watson, chief executive of MyCSP, who appeared at the session alongside Little, said the Cabinet Office's decision to move the contract to Capita had also had a big impact on service levels, driving "uncertainty" and in turn "much greater turnover of staff during 2024".
Watson said the voluntary turnover rate rose from 12% at the end of 2023 to 24% by the end of 2024 and that the peak of the 2024 service issues came at the same time as it struggled to hire permanent staff.
"We were not in a TUPE consultation yet and staff were saying, bluntly, 'Why would I join MyCSP when you have 18 months left of your contract?'” Watson said.
To address this issue, he said MyCSP has changed its resourcing model, focusing on recruiting more temporary staff, and has also increased its workforce size to its highest ever level.
The performance issues have improved in 2025, and Little told the committee that MyCSP is currently meeting all of its KPIs.