Government is not geared up to deal with the “tsunami” of complaints and requests for compensation that will result from the ongoing crisis in the Civil Service Pension Scheme, the Prospect union has warned.
It says the Cabinet Office must prepare for tens of thousands of demands for compensation over recent backlogs that have seen lump sums and regular payments delayed – along with unfulfilled requests for pension projections. The union says compensation awards of several thousand pounds will be due in some cases, meaning that the overall liability could run into tens of millions of pounds.
Prospect, which represents professionals such as engineers and scientists in the civil service, says that failing to put appropriate measures in place to deal with the anticipated spike in compensation requests risks bringing the CSPS into further disrepute.
The union has written to Cabinet Office permanent secretary Cat Little, parliament’s Public Accounts Committee, and the Pensions Ombudsman setting out what it believes the appropriate approach to complaints should be.
Its letter to the PAC notes that at the beginning of December, when administration of the pension scheme transferred from MyCSP to Capita, roughly 8,500 retired members were waiting for their delayed pension to be paid and some 7,000 dependents’ pensions were outstanding.
Prospect says that as of 23 April there were 23,000 delayed retirement quotes awaiting processing. It says all of those scheme members are likely to have grounds to claim for financial and other losses arising from “maladministration”, while “tens of thousands of other scheme members” could also submit complaints.
The union says “substantial extra resources” will clearly be needed to handle complaints. It notes that in 2024-25 MyCSP received 339 Internal Dispute Resolution Stage 1 appeals and the Cabinet Office received 143 Stage 2 appeals, while the Pensions Ombudsman received a total of 9,610 complaints related to occupational pension schemes.
Prospect’s letter to Little says it is “vital” for the Cabinet Office to put necessary resources in place to deal with a surge in complaints about serious maladministration. It acknowledges that there is uncertainty about what the actual numbers will be, but says the department must “regularly monitor” complaints statistics so that additional staff can be drafted in if numbers turn out to be “significantly higher” than expected.
Concerns over ‘compensation cap’
Prospect’s letter to MPs expresses concern that the Cabinet Office, which is ultimately responsible for oversight of the CSPS, does not anticipate circumstances where compensation of more than £2,000 will be payable to scheme members in relation to “non-financial loss” – such as distress or inconvenience.
It says that although the figure is in line with Pensions Ombudsman guidance that compensation above £2,000 “is only payable in exceptional cases”, many scheme members will have been impacted in ways that meet that definition.
The union’s letter to Little warns: “Any attempt to effectively cap, or otherwise systematically underpay, compensation for non-financial losses would be unacceptable, particularly in the context of the serious detriment these members have already suffered. It would also undermine confidence in the process and ultimately generate substantial numbers of complaints to the Pensions Ombudsman.”
The Cabinet Office usually decides who is responsible for paying compensation that it determines CSPS members are owed. Prospect said the background to the transfer of scheme administration from MyCSP to Capita could make it “more difficult than usual” to attribute blame and recover payment.
Risk of ‘further disrepute’ for CSPS
CSPS administrator Capita and the Cabinet Office are currently working towards returning the pension scheme to agreed service levels by the end of next month.
However, Prospect said that CSPS “recovery” will not have been achieved until members’ complaints have been determined and compensation has been paid.
Deputy general secretary Steve Thomas said confidence in the management of the scheme would not be restored if thousands of members are forced to “wait years” for determination of their complaints and payment of compensation.
“The handling of members’ complaints has the potential to cause significant additional distress and bring management of the scheme into further disrepute,” he said.
“This is already the worst case of pension mismanagement I have ever seen. Failing to put the necessary resources in place to deal with the inevitable increase in complaints would make things even worse.
“Tens of thousands of retired scheme members and dependants have experienced delays receiving pensions. Tens of thousands of active members considering retirement are waiting for delayed quotes. Tens of thousands more have already delayed their retirement due to this chaos. Hundreds of thousands of younger scheme members have been affected in numerous other ways.
“We cannot be sure what proportions of members with a legitimate complaint will use the scheme’s Internal Dispute Resolution process, but it will be many multiples the level ever experienced before.”
Civil Service World sought a Cabinet Office response. It had not provided one at the time of publication.