Yesterday I reported on Richard Smith’s complaint that some life companies write about people either having DC pots or DB pensions, something which is not the case as the dashboard will reveal. We all have state pensions which will pay much more than many estimated retirement incomes from private DC pots or pensions.
But there is another type of pension millions are building up , provided for work paid for in the public sector. The administration of these pension schemes is managed by private companies such as Capita and for the most part goes unnoticed as pensions are paid without fuss and drama. There is no big decision to make beyond the payment of AVCs and whether to bring the onset of payments forward or delay payment.
Read the article below (which I only participated in because I was asked to by the Daily Mail and Money Mail) and you discover another world of pensions which does not get discussed at our conferences where funds drive thinking.
In summary, here is what has happened since Capita took over from MyCSP last December. Capita are failing where My CSP succeeded and I’m left gobsmacked that a successful service has found such problems so quickly.
My reaction to the case studies I was shown by Tanya Jefferies were…
- That ordinary people were being let down and could suffer long term financial damage
- That what is meant to be reward is turning out for many to be an at retirement nightmare
- That the impact on pensions elsewhere can only be bad.
Yesterday I published a report on the NAPF, PLSA and now Pensions UK and how it has evolved from its early days in the 1920s, to what it is today, 100 years later. It seems that along the way, we have moved ever further from the pensions paid without funds to a point where we have funds with no pensions, free as pots.
But our DC pots are nothing like the state pension or the pensions that Capita has been tasked to pay for those in the civil service. I suspect that the wish to simply get a pension (with some capital as a tax free sum) is all that you need satisfying in public defined benefit pensions , the state pension is even simpler. The story in the Daily Mail can be understood by anyone who has engaged with pensions.
My hope is that we can return (with the pension dashboard, guided retirement outcomes and CDC schemes) to a pension world that aspires to the simplicity of the public sector and the state pension. My hope is that we take notice of failures like the one posted by Tanya Jefferies. It reminds us of what people want (and don’t always get) from a lifetime of saving.
It is the payment of income as promised that we must focus on, anything less is considered “Meltdown”
“Capita are failing where My CSP succeeded”
Oh, and I cannot emphasise this enough, *absolutely not*.
Obviously the focus has to be on recovery first and blame later.
But when the investigations are done MyCSP will not come out of this well
The root cause was privatisation of the administration of this (and others, such as Teachers) schemes. A complete disaster that has failed on every level
Some of the features of public sector DB schemes can make DC look simple. It took 8 months (after retirement) to get one LGPS pension started, with a statement from the administrators that a further adjustment might be needed. It also only takes a quick look at the rules of the NHS final salary pension scheme to see all the calculations and adjustments that might be necessary. One issue with those schemes is that they need accurate records going back many years. Most modern DC schemes just need a current pot value.
I had a problem with a Teachers Pension, administered by Capita. It had been split into 2 parts due to the changes they had made with ‘career average’ The first part was accessible and clear when I reached 65. I gave 4 months notice for the second part but received nothing. The figures had been wiped off the TP website. Eventually they gave me a lump sum – which I hadn’t wanted or asked for. The complaints process has taken 2 years so far with no response. Chaos.
Sadly, Scotland – where admin is not outsourced, but carried out by the Public Pensions Agency – has similar issues.
http://www.heraldscotland.com/news/25828092.watchdogs-damning-report-scottish-public-pensions-agency/
Apologies if the above link is behind a paywall.
The gist of the “post-McCloud” scandal affecting the SPPA (with additional criticism for HMRC and GAD) is this:
The SPPA underestimated the scale and complexity of implementing a landmark court ruling, and failed to be sufficiently transparent with scheme members, ministers and MSPs, according to a damning report by Audit Scotland.
The watchdog said the SPPA set “overly ambitious revised targets” and “created an impression of progress” and yet repeatedly missed deadlines that may mean thousands of retired public servants in Scotland could end up receiving the wrong pension payments for years to come.
In 2015, the UK Government changed aspects of public sector pension schemes, but in 2018 the Court of Appeal in the McCloud/Sergeant cases found the reforms unlawfully discriminated against younger public servants.
The ruling, known as the McCloud judgment (after the impact on some judges’ pensions), meant the SPPA had to recalculate pensions for affected members.
For the period between 1 April 2015 and 31 March 2022, it had to let eligible members choose between the old final salary scheme, based on pay near retirement, or the new career average scheme, based on average pay across their career.
Under legislation passed in 2022, pension bodies including the SPPA were required to issue Remedial Service Statements (RSSs) setting out those options by 1 April 2025.
However, by November 2025, the SPPA had only partly completed this task.
Only 108,506 of the 196,316 eligible members had received an RSS, equivalent to 55% of the total caseload.
Just 24% of all retired members who qualify — some 16,437 out of about 68,000 people — had received an RSS.
While that included 85% of Police scheme members, it was only 25% of NHS scheme members and 9% of teachers’ scheme members, 1,918 out of 21,422.
The agency had not yet commenced issuing RSSs to the 1,835 eligible retired firefighter scheme members. Ironically, the “Sergeant” part of McCloud/Sargeant was a case brought by a firefighter.
Because of these delays, some retired public sector workers may still not be receiving the full pensions they are owed.
Until recalculations are completed, individuals continue to be paid based on their original scheme allocation, which may prove less generous once remedy choices are applied.
Any arrears will attract an 8% interest payment funded by the UK Government, the Auditor General notes that underpayments, overpayments and retrospective tax adjustments could create significant financial uncertainty for those affected.
The SPPA has repeatedly changed its timetable.
What began as a revised October 2025 target has now stretched into the late 2020s.
Current plans indicate remedy work for NHS pension members may not be completed until July 2028, more than three years after the original statutory deadline.
In a worst-case scenario, if additional staff funding is not secured, the agency has warned deadlines could slip as far as 2030.
The Auditor General said the SPPA was simply not prepared for the volume and complexity of cases, or for the late guidance.
According to his report, implementing the remedy increased the SPPA’s annual workload five-fold, while it continued to deliver business-as-usual services such as paying pensions and issuing annual statements.
Many cases involve complicated employment histories, changes in working patterns or ill-health retirements that made automation difficult.
The audit is particularly critical of the agency’s governance and approach to transparency.
It says the SPPA set overly ambitious revised targets that created a misleading impression of progress and failed to clearly communicate the scale of the difficulties it was facing.
Further delays were only formally acknowledged days before the October 2025 deadline was missed.
The audit report also notes that the SPPA did not fully respond to information requests from Holyrood’s Finance and Public Administration Committee during 2025.
The Auditor General also highlighted instability at senior leadership level, with a new chief executive appointed in June 2024 followed by the creation of additional executive posts.
The agency has not had a consistent senior management team in place for some time.
The effectiveness of its Audit and Risk Committee has also been questioned. The chair resigned before the end of her term, and auditors raised concerns about reduced scrutiny following changes to board structures and the removal of some pension board oversight functions.
The audit process itself was hampered by poor-quality supporting evidence, with several audit adjustments required to correct the agency’s financial statements.
A number of recommendations from previous years remain outstanding.
There was criticism too for HM Revenue and Customs and the Government Actuary’s Department.
Stephen Boyle, Auditor General for Scotland, said: “I am concerned about the SPPA’s capacity to deliver outstanding remedy statements within the extended timescales.
“The impact of ongoing delays is of significant concern to many scheme members, particularly current pensioners and those close to retirement.
“The SPPA needs to provide greater transparency on its progress and take action to address other issues regarding governance and transparency raised by the auditor.”
Last December, Dr Stephen Pathirana, the SPPA’s chief executive, told MSPs he was “sorry that many of our retired members are still waiting for their choice when they expected to have it by now.”
“I understand this can have been especially upsetting in certain circumstances. Delivering the McLeod remedy has been and remains a huge undertaking,” he added.
A recent spokesperson for the SPPA said: “We welcome Audit Scotland’s unqualified opinion on our accounts and its audit recommendations. The SPPA continues to work constructively with Audit Scotland and is already taking action to address areas for improvement.
“We have robust governance arrangements in place, with oversight from our Management Advisory Board and Audit and Risk Committee, as well as scheme-specific pension and advisory boards to support us to deliver for our members.
“Delivering the McCloud Remedy to the approximately 215,000 members who are eligible is our key priority, alongside continuing to effectively administer pensions for over 600,000 teachers, police, firefighters’ and NHS employees in Scotland.
“Like other public sector pension administrators across the UK, it is taking longer than expected for us to complete this work because the UK Government’s original statutory timelines were overly ambitious and underestimated the scale and complexity of the task.
“While retired members will already be receiving the pension they are entitled to under the rules at the time they retired, we appreciate that the choice provided by the McCloud Remedy will make a difference to some.
“Our Chief Executive has apologised to members who have been affected by the delay. Dr. Pathirana attended the Scottish Parliament’s Finance and Public Administration Committee in December to discuss progress in delivering Remedy in detail and will provide a further written update before appearing again in March to provide a further update.
“The SPPA is in regular contact with members, employers, employer organisations, unions, the Pension Boards, and the Pensions Regulator to ensure all are kept up to date on progress.
“We are regularly updating members through direct communications and newsletters, and via the dedicated Remedy pages on the SPPA website and will continue to do so until we have issued all remediable service statements.”
There’s a major difference between failing to implement the McCloud remedy (which every scheme is guilty of regardless of the structure of administration arrangements) and … failing to pay thousands of retired people any pension at all.