Hundreds of Brits ‘left with nothing’ as company fails to pay their pensions | Personal Finance | Finance

The Civil Service Pension Scheme, which manages the pensions of approximately 1.7 million people, has failed to pay out regular monthly pensions and one-off lump sums to many of its members this month. This has left many former state employees – including retired teachers, police staff and administrative workers – with no income to cover basic living costs.

The problems were sparked by a change in administration. Last month, the outsourcing giant Capita took over the management of the pension scheme from the previous provider. However, Capita claims it inherited a much larger backlog of cases than it had originally agreed to handle. As a result of the issue, retirees found their bank accounts empty. According to the BBC, Steve Duell, 65, retired on January 1 after 40 years at the Land Registry. He said he would have to borrow to pay his bills if he does not receive his pension by the end of the month.

He should have received a lump sum shortly afterwards, but has received no information at all about his retirement package. The retiree said he made numerous attempts to contact the administrators, including spending nearly 15 hours on hold.

“We’ve got no money, and we’ve got lots of financial commitments. We need to pay off car loans and make mortgage payments. We arranged to get building work done on the house, on the basis of expecting a lump sum at the start of January,” he said.

Until the end of November 2025, the Civil Service Pension Scheme was administered by MyCSP. The contract was taken over by Capita on December 1, following a two-year lead-in period, in a seven-year deal worth £239 million. It administers pensions for public sector institutions including HMRC, the MoD, the Welsh and Scottish governments, the CPS, Defra and the FCDO.

Capita launched a new online portal for customers to access projections of their expected pensions and lump sum payments. However, the portal launch was plagued with problems. This included having all 1.7 million members create a new account, but the system frequently failed to recognise existing usernames, emails, or even personal identities during the setup process.

In a statement to the BBC, Capita said that when it took over, it had expected a backlog of 37,000 cases, but the actual backlog was 86,000. Capita said it now has more than 500 people working on the project, double that of the previous provider.

“Our teams are working tirelessly to clear the backlog we inherited and resolve member queries as quickly as possible. We sincerely apologise for the inconvenience caused to our members,” it said.

The Public Accounts Committee warned in October that Capita would not be ready for the planned takeover. Committee chair Sir Geoffrey Clifton-Brown said at the time: “It is deeply frustrating for this committee to be scrutinising an issue that ought to be as seamlessly run as civil service pensions.

“Scheme members who have dedicated their careers to public service ought to be secure in the knowledge that it is under sound administration.”

While Capita carries out the day-to-day work, the Cabinet Office is accountable for how that contract is performing. A Cabinet Office spokesperson said it remained “committed to working with Capita to ensure the scheme’s success and [to] safeguard the interests of all members.

“We are aware of the issues some members have faced and we have instructed Capita to fix them urgently,” the spokesperson added.

Fran Heathcote, general secretary of the PCS union, which represents civil servants, said: “This fiasco is extremely distressing for those who have worked and paid into their pension all their working lives.

“We believe that this work should be run by the civil service, under ministerial control, so that it can be properly resourced and pensions paid on time.”