Civil service unions have called for ministers to consider ending Capita’s contract to run the Civil Service Pension Scheme after the government announced that the firm’s contract to run the Royal Mail pension scheme would be terminated.
Nick Thomas-Symonds, the minister for the Cabinet Office, told MPs yesterday he was ending the Royal Mail contract with Capita due to “a failure to meet critical transition milestones and a lack of confidence in Capita’s ability to implement and transition to the new operating model in a timely fashion”.
In 2024, Capita won a bid to renew its contract to administer the Royal Mail Statutory Pension Scheme for six years from 2026, with an option to extend for a further two years. Thomas-Symonds said Capita was given an 18-month window to prepare for the transition but failed to deliver numerous milestones, including failing to implement required IT automation.
“To ensure members are protected, we will ensure continuity of the existing contract, but let the message be clear: I will not and we will not tolerate delivery failure from contracted partners,” Thomas-Symonds added. “Public services require high-quality delivery, and public money should not be used to fund performance that falls short of the standards we expect.”
In his update to the House, Thomas-Symonds also commented on the crisis in the administration of the civil service pension scheme.
He said the delivery of the service since the 1 December transfer from MyCSP to Capita had "fallen far short of the required standard” and that Capita had failed to deliver on its assurances that the transition "would be handled with the utmost care and that any backlogs would be managed effectively".
Thomas-Symonds said the firm had been aware of "the scale of the challenge”, having been told to plan for up to 100,000 work in-progress cases in July 2025, “but failed to deliver the IT automation and portal functionality required when the service went live”.
The minister said the Cabinet Office is investigating the respective liabilities for the transition failures between Capita and MyCSP.
Regarding the Capita contract, he said the department has “taken direct action on all commercial levers… withholding milestone payments where deliverables have not been met, and we reserve every right to take further formal action”.
“Capita must clear all inherited arrears by the end of this month and restore service levels to standard, contractually required levels by the end of June this year,” he added. “We will continue to use every commercial lever at our disposal to ensure that these standards are met.”
'These issues have been going on for far too long'
Responding to the minister’s remarks, PCS general secretary Fran Heathcote said the decision to terminate Capita’s role in the Royal Mail pension scheme "sends a clear message which is this can be done".
"When a contractor fails, contracts can and should be ended," she said. "The same must apply to the civil service pension scheme."
Heathcote said PCS has "consistently raised the alarm as civil servants and pensioners have been left in distress, facing delays and errors to the payments they rely on".
“It is simply unacceptable that this is allowed to continue when a clear alternative exists in bringing civil service pensions back in-house," she added. "The government must now act with urgency, end Capita’s contract, and prevent further failure."
Steve Thomas, deputy general secretary of Prospect union, said the contract should be be removed from Capita if it "continues to not deliver as promised".
He said: "The ongoing problems with the Civil Service Pension Scheme are totally unacceptable and are causing real hardship for a significant number of recent retirees and delayed the retirement of many others. These issues have been going on for far too long already and we need to see a rapid resolution.
“The government has already opted to not give them the Royal Mail contract. It is becoming clear, if it wasn’t already, that outsourcing these contracts has been a catastrophic failure which should now be reviewed and work undertaken to assess the feasibility of bringing back in house."