The Public and Commercial Services (PCS) union has said government should end an outsourcing contract with Capita in its troubled civil service pension after it cut the supplier in a separate government-run scheme.
After a Cabinet Office announcement that Capita is losing its contract to administer the Royal Mail pension scheme, due to “missed milestones” among other things, the PCS called for the same rationale to be applied to the troubled civil service arrangement.
Capita’s failures since it took over the Civil Service Pension Scheme (CSPS) administration in December 2025 have been aired in public, but the supplier has retained the contract.
The PCS said the government must “urgently follow the decision to terminate Capita’s contract with the Royal Mail Statutory Pension Scheme” by taking the same action on the civil service contract.
Announcing Capita’s termination in the House of Commons, Cabinet Office minster Nick Thomas-Symonds said: “Capita had an 18-month planning window to prepare for the transition. They failed to deliver numerous milestones, including a failure to implement the required IT automation. The Cabinet Office repeatedly flagged delays in transition milestones.”
Following the minister’s comments, a Cabinet Office spokesperson confirmed: “We have terminated the contract with Capita for the Royal Mail Statutory Pension Scheme following their failure to meet key delivery milestones.
The CSPS has had huge problems since Capita replaced MyCSP as pension administrator in December 2025. Capita has faced criticism this year following its takeover of the Civil Service Pension Scheme administration, which has seen thousands of former civil servants face financial hardship due to delays.
PCS general secretary Fran Heathcote said the decision to terminate Capita’s role in the Royal Mail pension scheme is proof that “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. We have consistently raised the alarm as civil servants and pensioners have been left in distress, facing delays and errors to the payments they rely on.
The PCS is calling for the government to bring the service back in-house to ensure accountability and proper service for members.
In March, Cabinet Office parliamentary secretary Chris Ward said: “For decades, successive governments have been, at best, ambivalent about whether public services are delivered in-house. At worst, we’ve had outsourcing by default, with public services hollowed out and sold off to the lowest bidder. That era ends today.”
The government introduced a Public Interest Test, requiring all departments to assess whether a service can be delivered more effectively in-house before any outsourcing decision is made. This will apply to service contracts of £1m and above, covering over 95% of central government spend. “All departments must also publish insourcing strategies to make the biggest wave of insourcing in a generation a reality,” said Ward.
A recently retired civil servant still waiting for his pension, which has been delayed due to Capita failings, said: “I’d agree that shockingly bad performance should have serious consequences, and I was therefore heartened to hear that Capita had lost the Royal Mail contract. I am sympathetic to what the PCS is saying, particularly on accountability.
“But the reality will be more complicated and require careful thought and planning,” he added. “There aren’t battalions of civil servants on standby ready for the work. Significant investment would be required in people and IT for this to happen, as well as political agreement to a rise in civil service headcount. Time would be needed to plan and implement a robust system so change would take time. What happens in the interim?”
