Capita Pension Fiasco Leaves Thousands Of Retirees In Limbo

Thousands of retired and retiring public sector workers across the United Kingdom have been left in financial limbo after a botched handover of the Civil Service Pension Scheme’s administration to outsourcing giant Capita. Since December 1, 2025, when Capita officially took over the seven-year, £239 million contract from the previous provider MyCSP, a wave of delays and confusion has swept through the system, leaving many pensioners without their expected lump sums or monthly payments—and with little clarity on when relief might arrive.

For Steve Duell, a 65-year-old from Hull who retired on January 1, 2026, after four decades at the Land Registry, the transition has meant weeks of uncertainty and mounting anxiety. "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," Duell told the BBC. Despite spending nearly 15 hours on hold trying to reach Capita, he has yet to receive any information about his retirement package.

Duell’s predicament is far from unique. Paul McKenna, 59, who took early retirement from HMRC on health grounds after a heart bypass, finished work at the end of November 2025, having given five months’ notice. He had hoped to use his lump sum to clear his mortgage and rely on regular pension payments. Yet, as of late January 2026, he is still waiting. "The worry has been affecting my sleep, it's bad for my angina. I'm supposed to be getting married in September, but this has left me with lots of uncertainty," McKenna told the BBC. He described calling the helpline, only to be told twice that "the building is on fire and we've had to evacuate," before finally being informed his case was with the “resolutions team.”

Capita’s takeover was meant to bring improvements, including a new online portal for pension projections. Instead, the rollout has been dogged by technical problems and a massive backlog of unresolved cases. According to Capita, when it assumed control, it expected a backlog of 37,000 cases, but quickly discovered the real number was 86,000—more than double the estimate. The company has since ramped up its workforce to over 500 full-time employees, a 50% increase over its predecessor, and claims to have made more than £763 million in payments since December 2025.

“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,” a Capita spokesperson told BBC and Civil Service World. The firm says it is prioritizing urgent cases, especially those involving financial hardship, imminent retirement, bereavement, or beneficiary changes, and promises further enhancements to streamline administration in the coming months.

The Cabinet Office, which manages the administrator contract, has come under fire for its handling of the transition and its lack of transparency. When asked by Conservative MP Andrew Snowden on January 13 how many scheme members were awaiting delayed payments or retirement quotations, Cabinet Office minister Anna Turley admitted, “At this time Capita has not provided this information to the Cabinet Office. The focus is on working with the Cabinet Office in order to resolve queries and delays and to move to a stable service as quickly as possible.” She acknowledged the delays and said the government was working closely with Capita, providing additional support and increasing staffing. “We remain committed to working with Capita to ensure the scheme's success and safeguard the interests of all members,” a Cabinet Office spokesperson reiterated to Civil Service World, adding that “strong contractual levers” were in place to ensure Capita delivers.

Yet unions and affected pensioners say these assurances ring hollow as the hardships deepen. Prospect, the union representing specialist civil servants, described the situation as “a real scandal.” Deputy general secretary Steve Thomas told Civil Service World, “This completely unacceptable situation has left people at the end of their career of dedicated public service unable to pay their mortgage, with no idea how long the situation will continue. Prospect alone has supported members in so many cases that we believe thousands could be affected.” Thomas called for immediate resolution, automatic compensation for those affected, and steps to ensure such failures are never repeated.

The Prison Officers’ Association echoed these demands, stating that "many members are experiencing unacceptable payment delays” and these failures are “causing serious financial hardship and distress” while “undermining confidence in the pension scheme.” The POA, together with other Trades Union Congress affiliates, has written to the Cabinet Office demanding a clear timetable for clearing the backlog and resuming work on McCloud Remedy cases—an ongoing issue affecting the calculation of some public sector pensions. The union also wants guarantees that hardship and urgent cases will be prioritized, and that a compensation scheme will be established for those forced into financial straits by the delays.

The PCS union, which represents a broad range of civil servants, went further, arguing that the administration of the scheme should be brought back under direct ministerial control. General secretary Fran Heathcote called the situation “extremely distressing for those who have worked and paid into their pension all their working lives.” She told the BBC, “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.”

Parliament’s Public Accounts Committee had warned as early as October 2025 that Capita would not be ready for the planned takeover. Committee chair Sir Geoffrey Clifton-Brown said, “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.”

Capita, for its part, maintains that it was blindsided by the scale of the backlog left by MyCSP. However, MyCSP insists it completed a “comprehensive handover” with all outstanding work fully disclosed and agreed upon by Cabinet Office senior management. The company also pointed to the National Audit Office’s assessment, which found MyCSP consistently met required service levels during its tenure.

Meanwhile, the human cost continues to mount. Many pensioners report months of waiting, financial hardship, borrowing to pay bills, struggling to keep up with mortgages, and even signing up for Universal Credit. With thousands potentially affected and no clear end in sight, confidence in the scheme’s administration has been shaken.

As pressure grows from unions, Parliament, and those directly impacted, the government faces mounting calls not just for urgent fixes but for systemic change to ensure such a debacle cannot happen again. For now, the retirees who spent their working lives serving the public are left waiting, watching, and hoping that the system they relied on will finally deliver what they are owed.