Left waiting: the Civil Service is among Croydon’s biggest employers, including in the HMRC building at Ruskin Square that overlooks East Croydon Station. But recent retirees are not getting paid their pensions
SANDRA STEAD reports
A botched handover between private-sector contractors has left thousands of former civil servants waiting months for pension payments.
The saga has raised again serious questions about the government’s reliance on outsourced services.
Thanks to pressure from civil service unions, campaigners and parliamentary committees, the Cabinet Office now appears to be taking a tougher line with Crapita, the outsourcing giant at the centre of this latest crisis.
There have been “questions in the House”, no less, with Crapita’s share price taking a 16% plunge earlier this month following an uncompromising statement by the (then) Paymaster General, Nick Thomas Symonds.
“It is clear that non-delivery of technology has been a fundamental part of Capita’s inability to deliver,” Thomas-Symonds said in a statement to the Commons on July 6.
“The reality is that it was completely unprepared and its system was overwhelmed, which resulted in a backlog that skyrocketed to a staggering 120,000 unresolved cases.”
“Staggering” indeed.
A “Cabinet Office pensions recovery taskforce” was established by the Civil Service to do Crapita’s job for them, but two deadlines for delivery have been missed by Crapita and their bosses have been dragged in front of a committee of MPs to account for their… well, crap performance.
Strongly critical: Nick Thomas-Symonds issued a statement to the Commons earlier this month
It is reckoned that around 8,500 civil servants who retired this year are still waiting for pensions they have worked for, often through decades of public service.
Retired tax specialists, job centre advisers, Land Registry clerks and Border Force staff are among those in Croydon caught up in a backlog that has left some waiting more than six months for payments.
For many, retirement plans years in the making have been thrown into uncertainty. Some are relying on savings while waiting for lump sums and regular pension payments to reach their bank accounts.
According to Thomas-Symonds, 4,100 bereaved families have also been affected, with death-in-service payments delayed at a time when financial support may be urgently needed.
As payments failed to appear, those trying to contact the pension administrators reported bounced emails and phone lines which were constantly busy. It was Angela MacDonald, HM Revenue and Customs’ deputy chief executive, who convened the 150-strong recovery taskforce to tackle the backlog. They have been issuing fortnightly updates. Civil Service employers have also provided emergency hardship loans, , for those in the most serious need, which had totalled £7.2million by mid-June.
Normal service was supposed to be resumed by the end of June, but that has become just the latest deadline that Crapita missed.
“Let me also say that public money will not fund Capita’s failings. We will recover every single penny of these surge costs directly from Capita, and I will not remove a single member of the team until the service is permanently fixed and fully restored.”
The Civil Service Pension Scheme – CSPS – is valued at around £189billion in total future benefit liabilities. The scheme has roughly 1.7million members.
The administration of the CSPS – was transferred from MyCSP, a public-private partnership involving Equiniti, to Crapita Pension Solutions in December 2025. During the two-year transition period after winning the contract in 2023, Crapita failed to establish accurately what its workload would look like when it took over.
In February this year, Chris Clements – the managing director of Crapita’s pension arm – told the Commons’ Public Accounts Committee that the company had made assumptions about the nature of the backlog the company would inherit. These assumptions proved highly optimistic, underestimating not just the size of the backlog, but also the complexity and age of many of the cases.
Called to account: Crapita’s Chris Clements at the Public Accounts Committee in February
In its 2023 bid for the juicy government contract, Crapita projected a low staffing requirement, partly because it planned to make heavy use of AI shortcuts and automation of tasks. But its IT systems and automated processes were not ready in time for the transition. Crapita was never had the capacity needed to manage the caseload it inherited.
The handover problems have an uncomfortable precedent.
It was in 2012 that MyCSP actually replaced Crapita as administrator of the scheme. That transition was also mishandled. Then, it was MyCSP that was claiming it had not been given a full picture of the backlog it was inheriting.
The scale of the current disruption suggests that too little was learned from the previous switch of administrator.
A National Audit Office report published in June 2025 said the Cabinet Office believed its new contract with Crapita would allow it to hold the contractor to account more effectively. Yet even by then Crapita had failed to meet three of six key transition milestones, a warning that should have prompted stronger intervention.
The risks were not hidden. The NAO found that many of the risks that later materialised into critical issues were prominent in planning documents and simply hadn’t been addressed effectively. Pensioners and bereaved families bore the consequences.
The Cabinet Office’s programme team was also audited around six months prior to the transition, and only received an “amber” delivery confidence rating.
Report warning: it is not as if we haven’t been here before with failing private contractors
Of course, the deeper problem is an entrenched one: the government’s troubled record of managing outsourced public services.
A parliamentary report published in 2018 after the collapse of Carillion warned of “a depressing inability of central government to learn from repeated mistakes”, and the long-term failures in the design, letting and management of contracts.
The report, After Carillion: Public sector outsourcing and contracting, criticised the government’s tendency to push poorly understood risks on to private contractors.
It also pointed to markets dominated by too few suppliers, where aggressive acquisitions had weakened competition. Another concern was a tendency for price-led bidding rounds that gave too little weight to a company’s record of delivering comparable services.
Sound familiar?
It’s a similar pattern in the case of Civil Service Pension Scheme administration.The Cabinet Office knew about the risks, had mechanisms to monitor them and was aware of earlier failures in transitions. Yet it did not ensure that Crapita had the capability, staffing or technology ready to manage the backlog.
Which brings us to a new bureaucratic phrase: “insourcing”.
Crapita’s failure has renewed calls for Civil Service pension administration to be brought back in-house. In April, after the Cabinet Office terminated Crapita’s contract for the Royal Mail Statutory Pension Scheme, Fran Heathcote, the general secretary of the Public and Commercial Services Union, called for similar moves with the CSPS.
Unacceptable: union leader Fran Heathcote has called for the Civil Service pension scheme to be brought back in-house
“It is simply unacceptable that this is allowed to continue when a clear alternative exists in bringing Civil Service pensions back in-house,” Heathcote said.
“The government must now act with urgency, end Capita’s contract and prevent further failure.”
In Parliament, Thomas-Symonds said he would withhold payments to Crapita. “This episode highlights the severe limitations of outsourcing the Civil Service Pension Scheme. I say openly to the House that if I could insource this operation today, I would do so.”
Keir Starmer’s Labour had an election manifesto commitment to deliver “the biggest wave of insourcing of public services in a generation”, and Thomas-Symonds described the CSPS as “a prime candidate for insourcing”. We will have to wait to see whether Andy Burnham’s Labour sees the issues in the same way.
But for those pensioners still waiting for the money they are owed, arguments about outsourcing may feel abstract. Their hardship is measured in missed payments, postponed plans and months of uncertainty after a lifetime of public service.
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