Cabinet Office blasted by regulator over failures managing Civil Service pension scheme | Personal Finance | Finance
The National Audit Office (NAO) launched an investigation into the adminstration of the Civil Service Pension Scheme after a surge in complaints among its 1.7 million savers last year. A report revealing the findings of the investigation was published this week. It found that in 2024 the scheme’s administrator MyCSP failed to deliver retirement quotes and first pension payments, including lump sums, for several months.
The Cabinet Office is responsible for the scheme’s policy, whilst MyCSP administers the scheme to members in a contract worth £238 million since 2016; this means the Cabinet Office is meant to oversee MyCSP and make sure it is doing its job effectively.
The Civil Service Pension Scheme, includes two pension schemes, the Principal Civil Service Pension Scheme and the Civil Servants and Others Pension Scheme.
Between them they hold the pension savings of 1.7 million current and former civil servants. The Civil Service Pension Scheme is one of the largest public sector pension schemes and in 2023-24, paid out just nearly £8 billion to members. It also has total liabilities approaching £190 billion.
The Civil Service Pension Scheme is also an unfunded scheme, which means pension payments are covered by current government revenue such as taxation or borrowing.
The NAO criticised the Cabinet Office for failing to hold the adminstrator to account, although MyCSP is expected to pay a financial penalty of £228,538 for failing to provide timely retirement quotes and first pension payments in 2024.
“Our investigation was prompted by correspondence that we received from scheme members with concerns about the service they had received, coupled with a reported rise in the level of complaints about the Scheme, which had risen to 4,780 in 2024-25.”
The NAO said that the number of employees and pensioners in the schemes had increased from 1.5 million in March 2019 to 1.7 million in March 2024, which it admitted could be a contributing factor to the rise in complaints.
The NAO said the Cabinet Office “had been unable to hold the current pension scheme administrator, MyCSP, accountable for when performance has fallen below agreed service levels or incentivise improvements through its contract”.
“Alongside a rise in complaints, over the last two years MyCSP failed to answer calls within expected timeframes, answering at best 43% of calls within the target of 30 seconds.”
The pension scheme’s adminstrator is set to change to Capita in December 2025, in a deal which is expected to save £83 million, however Capita has so far missed three key milestones, leading to the Cabinet Office withholding £9.6m in transition payments.
Delays to meeting these milestones have also led Cabinet Office to agree a phased rollout with Capita, with some functions delayed until at least March 2026.
Gareth Davies, head of the NAO said: “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.”
