Capita’s deal to administer the new Royal Mail statutory pension scheme has been cancelled, Cabinet Office Minister Nick Thomas‑Symonds announced in Parliament on Wednesday.
Thousands of retired civil servants were left without income in January 2026 after Capita took over administration of the Civil Service Pension Scheme and struggled to process payments.
The outsourcing company assumed responsibility for the £239million contract from MyCSP in December 2025, but encountered significant operational challenges shortly after the transition.
Responsibility for pensions covering 1.7 million individuals spans multiple departments, including HMRC, the Ministry of Defence and the devolved governments in Wales and Scotland.
More than three months after the disruption began, updated information on whether the backlog has been fully cleared and all affected pensioners have received their payments has not been made available.
Concerns remain given the financial hardship reported by individuals who were left waiting for money they had expected to receive promptly upon retirement.
Initial expectations around workload proved inaccurate, with Capita preparing for approximately 37,000 outstanding cases before discovering the true figure stood at 86,000.
Efforts to manage the shortfall included deploying more than 500 staff to the project, representing roughly double the workforce used by the previous administrator.
Civil service pension delays continue months after Capita takeover leaves retirees unpaid
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PAOperational issues were compounded by problems affecting the company’s online portal, which had been designed to allow members to track pension projections and lump sum payments.
Warnings about the transition had already been raised in October 2025 by Parliament’s Public Accounts Committee, which questioned whether adequate preparations had been made.
Sir Geoffrey Clifton-Brown, who chairs the committee, said it was “deeply frustrating” to be examining issues that “ought to be as seamlessly run as civil service pensions”.
The impact on individuals has been significant, with some retirees reporting immediate financial strain after payments failed to arrive as scheduled.
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