Government terminates Capita’s Royal Mail pension contract

[TrueBlueTerrier]

https://www.computerweekly.com/news/366 ... n-contract

Contract termination comes as Capita’s failings in a separate government pension scheme hit the headlines

The government has terminated its Royal Mail pension scheme contract with Capita after citing failures to hit milestones. The announcement comes as Capita faces pressure in relation to the disruption to the Civil Service Pension Scheme (CSPS) since it took over administration in December.

Cabinet Office minster Nick Thomas-Symonds told MPs that the contract has been terminated because the outsourcing provider “failed to deliver numerous milestones”, adding: “Following a failure to meet critical transition milestones, and a lack of confidence in Capita’s ability to implement and transition to the new operating model in a timely fashion, I’m announcing today to the House that I have terminated the new Royal Mail statutory pension scheme contract with Capita.

“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.”

The Cabinet Office had not responded to Computer Weekly’s questions by the time this article was published.

Deja vu
The supplier 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.

In 2023, the Cabinet Office awarded Capita a seven-year contract worth £239m for the administration of the CSPS, which has 1.7 million members. The takeover from the previous administrator, MyCSP, took place on 1 December 2025. In the following month, amid delays and problems, an HMRC troubleshooter was brought in to lead an “urgent recovery plan”.

In October last year, in the lead up to Capita’s takeover, a Public Accounts Committee (PAC) report said there was a “real risk” that supplier would not be ready to take over the administration scheme on time. The PAC report listed inadequate staff levels, unrealistic automation targets and missed IT milestones as concerns.

In February, during a Public Accounts Committee meeting, Capita told MPs that the delays were in part caused by the 16,000 unread emails and 20 million database errors it was left with when it took over the contract.

Facing MPs then, Chris Clements, managing director of Capita Public Services, was asked if the business process outsourcing company had been lied to about the backlog. He said: “We were surprised by the nature of the backlog on going live.”

But in a letter to MPs, Duncan Watson, CEO at MyCSP – which was set up as a private and government joint venture in 2012 – said the company has no record of the database errors that Capita mentioned in a PAC hearing, adding that the 16,000 unread emails highlighted by Capita were the result of a “blackout” period when MyCSP could log them but not act on them.

He added that Capita’s preparations for the contract switch, such as dress rehearsals, were inadequate: “The second key lesson is the critical importance of detailed and robust planning of the period leading up to and including ‘cutover’ to the new administrator.

“We do not believe that these activities were carried out to the level of detail and thoroughness required for such a major transition. As a result, the risks associated with not having a robust transition/cutover process in place were not fully understood or mitigated prior to transition.”

[mr hil.]

https://www.ft.com/content/5b6cc2b5-568 ... aca119d371

Financial times are saying they will continue to "manage" it for at least another two years though.

[RobertT]

I believe the contract was renewed in 2024 for a start date in 2026 for another 6 years, with the option for another 2 after that.
All reports I've seen that aren't behind a pay wall, suggest that new contract has been terminated as of today(22 April 2026).

The FT article says:

Because of Capita’s failure to upgrade the system, the Royal Mail statutory pension scheme is now expected to be run using Capita’s existing platform for the next two years, until it is moved to a new delivery model, according to a person familiar with the matter.

I'm not sure that actually means Capita will still be running it....?

They have proved themselves to be incompetent in relation numerous pension schemes and they're clearly not up to the job at hand!

It's unclear who will take over the admin going forward.
Could it be a new company or will it go back to the PSC?

Hopefully nobody currently going through the process of taking their pension, or due to in the near future, will be affected too much by this.

If anyone wants to see the announcement and debate in Parliament, it's here: https://parliamentlive.tv/event/index/8 ... n=13:19:29

[NWpostie]

It would be better if all RM pensions goes under one single administrator the PSC.

Capita is not fit for purpose, how they got the contract should be investigated as I suspect corruption is part of it, whoever awarded the contract needs to answer some very serious questions.

[RobertT]

I've read quite a few online reports about this, including on Hansard which is the minutes of the parliamentary debate, and the only mention of what happens in the immediate future with the RMSPS, is 'continuity of service'.

There is mention of a 140 strong team going into Capita to sort things out, but it's not really clear to me how many of those are for the RMSPS and how many for the CSPS.

Longer term, there's talk of maybe keeping the admin for many government pension schemes in house, instead of outsourcing them.

Hansard: https://hansard.parliament.uk/Commons/2 ... ionSchemes?

This is what Capita have to say:

In relation to the Royal Mail Statutory Pension Scheme, detailed discussions around the future of this contract are ongoing. This contract has annual revenues of less than £10m with operating profit in line with divisional margin achievements.
Capita has administered the Royal Mail Statutory Pension Scheme since 2018 and will continue to work closely with all parties to ensure continuity and a smooth handover in line with the Cabinet Office’s future alternative arrangements.

https://www.capita.com/news-and-insight ... ion-scheme

[Hyrrokkin]

I've read quite a few online reports about this, including on Hansard which is the minutes of the parliamentary debate, and the only mention of what happens in the immediate future with the RMSPS, is 'continuity of service'.

There is mention of a 140 strong team going into Capita to sort things out, but it's not really clear to me how many of those are for the RMSPS and how many for the CSPS.

Longer term, there's talk of maybe keeping the admin for many government pension schemes in house, instead of outsourcing them.

Hansard: https://hansard.parliament.uk/Commons/2 ... ionSchemes?

This is what Capita have to say:

In relation to the Royal Mail Statutory Pension Scheme, detailed discussions around the future of this contract are ongoing. This contract has annual revenues of less than £10m with operating profit in line with divisional margin achievements.
Capita has administered the Royal Mail Statutory Pension Scheme since 2018 and will continue to work closely with all parties to ensure continuity and a smooth handover in line with the Cabinet Office’s future alternative arrangements.

https://www.capita.com/news-and-insight ... ion-scheme

Let us hope they lose the contract for RMSPS !

[RobertT]

Let us hope they lose the contract for RMSPS !

They have done.
For the longer term at least.

What we don't know is who will be administrator in the transitional period between now and when a new more permanent provider is chosen.
The info seems a bit sketchy, but it sounds like it could continue to be Capita, or it could be people brought in by the Cabinet Office but using Capita's tech.

I think I read somewhere the search for a new administrator, presumably one capable of providing the updated IT that Capita couldn't, is expected to take around two years.
That could be another outsourced firm, in-house government admin or the PSC.

I'm not a big fan of the PSC, but having the RMSPS and RMPP under one roof is by far the most logical.

[Hyrrokkin]

Let us hope they lose the contract for RMSPS !

They have done.
For the longer term at least.

What we don't know is who will be administrator in the transitional period between now and when a new more permanent provider is chosen.
The info seems a bit sketchy, but it sounds like it could continue to be Capita, or it could be people brought in by the Cabinet Office but using Capita's tech.

I think I read somewhere the search for a new administrator, presumably one capable of providing the updated IT that Capita couldn't, is expected to take around two years.
That could be another outsourced firm, in-house government admin or the PSC.

I'm not a big fan of the PSC, but having the RMSPS and RMPP under one roof is by far the most logical.

Oooops i got confused - as i do with all RM pensions



Well good news either way and it should go to PSC - they are not perfect by any stretch but it just makes more sense.

However we are dealing with Governments etc etc

[RobertT]

This is what the CWU have to say about it:

ROYAL MAIL STATUTORY PENSION SCHEME (RMSPS): GOVERNMENT ANNOUNCEMENT – CAPITA

Branches and Representatives may be aware from the publicity late yesterday that Nick Thomas-Symonds, the Government’s Paymaster General and Cabinet Office Minister, announced to Parliament that he was terminating the recent extended contract with Capita for “failure to meet critical transition milestones” and a “lack of confidence” in Capita’s ability to move to a new operating model. To avoid any confusion as to who this impacts, the RMSPS is managed by the Cabinet Office, but administered on their behalf by Capita since 2018. The RMSPS was introduced at the point of the privatisation of Royal Mail and has been in operation since 1st April 2012.

The Minister stated “Capita had an 18 month transition [period]. They failed to deliver on numerous milestones, including a failure to implement required IT automation. Furthermore, the Minister said “To ensure members are protected, we will ensure continuity of the existing contract, but let the message be clear: We will not tolerate delivery failure from contracted partners.”

As members of the RMSPS Governance Group, myself and Steve Halliwell, Postal Executive member, were notified of the Government’s decision also late yesterday afternoon in a letter from Simon Claydon, Director of Civil Service Pay, Policy & Pensions. The letter states “The Cabinet Office is writing to formally advise the Board of the decision to terminate the new RMSPS administration contract with Capita”.

Simon Claydon stated “Since the transition programme commenced in September 2024, the provider was required to deliver 10 specific milestones. To date, only four have been delivered, and all of those were significantly past their due date” He also said “Service delivery failure from contracted partners cannot be tolerated”.

Crucially, Simon Claydon confirmed “As the existing service is currently operating without issues, members are not expected to be detrimentally impacted by this decision.” He went on to say “The Cabinet Office will now carry out a comprehensive assessment to identify the optimal delivery model for this service”.

Firstly, I consider this development to be significant, bearing in mind the contract to administer the RMSPS was originally awarded to Capita by the Conservative Government and Capita have administered the scheme since October 2018. Recently, the Labour Government extended the contract, but in doing so, insisted on Capita delivering significant improvements to its service, including automation. At the time of the Conservative Government’s decision, we were very critical of the decision to move the work from Royal Mail Group, as we felt that the service provided by our members in the Pension Service Centre in Sheffield was excellent and we had severe reservations that this would be matched by Capita.

The actions of the current Labour Government to terminate the new contract should be applauded, as this is a positive and brave decision. That said, our concern now turns to what the future holds and what the long-term arrangements will be for the administration of the RMSPS. In this regard, we intend to discuss this development with Royal Mail to ascertain what their views are in regard to bringing the work back in-house as the scheme was originally managed by Royal Mail from 2012 to 2018, prior to Capita being awarded the contract.

The Governance Group (which Simon Claydon refers to as “The Board”) is due to meet next Thursday, and this will afford Steve Halliwell and myself the opportunity to pose questions about the Cabinet Office’s assessment for future service provision.
The Postal Executive is meeting on Tuesday 28th April, and will carefully consider this matter, and determine our policies for next steps.
Further developments will be reported.

[FAB]

The one area I prefer with Capita over PSC is they show the upcoming pension payment roughly a week before it’s paid. And their other documents such as the P60 are eventually shown as well. While the PSC has no members section once you actually get the pension. But apart from that Capita are slow and incompetent!