Cabinet Office’s contract with MyCSP, the current administrator of the Civil Service Pension Scheme, has not always effectively addressed when performance has fallen below agreed customer service levels, a new National Audit Office (NAO) report outlines.
The NAO investigation was instigated after a reported rise in the level of complaints about the Scheme from 3,335 in 2016/17 to 4,780 in 2024/25, coupled with correspondence from scheme members detailing concerns about the service they had received.
As of March 2024, the Civil Service Pension Scheme had 1.7 million members, including both current and former civil servants, with a total liability for future pension benefits of £189 billion. Cabinet Office is responsible for scheme policy, whilst MyCSP administers the scheme to members under a contract that has cost £238 million since 2016.
The contract between Cabinet Office and MyCSP contains 15 key service levels, such as the timely payments of death benefits, which can attract a financial penalty for MyCSP if there is a consistent failure to deliver against expected targets.
Between August 2017 and January 2025, MyCSP reported every month that it has met at least 87% of its key service levels, and for other service levels it is meeting at least 95% of them every month.
In 2024, MyCSP failed to provide timely retirement quotes and first pension payments, including lump sums, to scheme members for several months. As a result, Cabinet Office expects MyCSP to pay a financial penalty of £228,538.
Cabinet Office also applied a penalty of £19,355 to MyCSP in June 2022 for failing to deliver timely payments of retirement lump sums, but no other financial penalties have been applied since the contract was awarded in 2012.
Cabinet Office told the NAO there have been instances in the past when MyCSP has successfully requested that penalties be waived due to its end of year profitability levels and any extenuating circumstances MyCSP raise.
MyCSP’s contact centre performance has been below expected levels with an overall decline over the last two years. The target is to answer at least 80% of calls within 30 seconds, however, over the last two years, they have at best answered 43% of calls within 30 seconds and in November 2024, MyCSP was taking an average of 24 minutes to answer calls. However, as this is not a key service level, it does not attract a financial penalty, therefore limiting Cabinet Office’s ability to incentivise improvements to MyCSP’s performance.
Alongside the existing management of the civil service pension, Cabinet Office also faces the challenge of implementing a Remedy programme in response to the 2018 Court of Appeal ruling which found that the government’s 2015 changes to public sector schemes were discriminatory based on age.
This created a substantial and complex programme of work for MyCSP to administer in addition to the existing contract expectations. By the end of 2024-25, Cabinet Office had spent an additional £31.7 million funding on around one hundred MyCSP staff and contractors to implement the remedy, representing approximately 20% of MyCSP’s total workforce.
In 2023, Cabinet Office awarded Capita a new contract to take over the administration of the Scheme from December 2025, with the total value of the contract being £239 million for seven years with the option to extend by a further three years.
Capita has so far missed three key milestones in the transition to taking on the administration of the Scheme, leading to Cabinet Office withholding £9.6 million in transition payments. Delays to meeting these milestones have led Cabinet Office to agree a phased rollout with Capita, with greater functionality delayed until earliest March 2026.
Cabinet Office’s contract with Capita represents savings of £83 million over the lifecycle of the contract compared with the current MyCSP contract price. These savings are expected through innovation and automation, with the vision for the scheme to be the best-administered public service pension in the UK. However, an improvement plan is yet to be provided and there are no fixed innovation or digitalisation milestones for Capita to deliver against.
"Cabinet Office must reflect on the lessons learnt from MyCSP’s administration of the scheme, ensuring key performance indicators are monitored and enforced, and that important service improvements are introduced by Capita."
Gareth Davies, head of the NAO
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