Capita shares plunge following civil service pension scheme failures

Outsourcing giant Capita has admitted its handling of the civil service pension scheme has been ‘not good enough’, as its shares plummeted following a cabinet minister’s scathing attack.

The firm apologised for delays to the 1.7 million-member scheme, leaving thousands of civil servants awaiting crucial payments and retirement quotes.

Cabinet Office minister Nick Thomas-Symonds told the Commons on Monday that Capita’s contract was a ‘prime candidate’ for government management, though he ruled out an immediate move.

He pledged to recover ‘every single penny’ from Capita after the Government deployed a 140-strong team to tackle the backlog, including over 4,000 outstanding bereavement cases.

Shares in Capita tumbled as much as 16 per cent in Tuesday morning trading as the contract issues hit the stock.

Capita said: “Despite the progress made to date, we recognise the service has not been good enough, particularly for members waiting on bereavement, retirement and quotation cases and we are sorry for the distress and inconvenience experienced by those members.

“We now have the processes, automation and technology in place to work through the backlog.

“Capita is assessing the implications of the matters contained in the statement and, if required, will update the market as soon as it is able to do so.”

It will publish a trading update later this week.

Mr Thomas-Symonds said a move to insource the pensions contract hastily could disrupt payments as he acknowledged calls from MPs to bring it back in-house, but did not rule out “further interventions” as he hit out at the “corporate failure (and) empty promises” faced by scheme members.

He told MPs on Monday there were more than 6,700 quotations for past retirement dates and 4,100 bereavement cases outstanding.

Public sector union Prospect has also joined calls for Capita to be “stripped” of the pension contract, which was signed by the previous Conservative government in 2023.

Capita was given a deadline of June 30 to deliver the terms of the £239 million pensions contract after failing to meet targets.

The Government has withheld nearly £10 million in payments to Capita for its poor performance over the Civil Service scheme.

A similar Capita contract for the Royal Mail pension scheme was terminated by Labour in April after numerous failings and a botched transition.

Prospect deputy general secretary Steve Thomas reiterated demands for the contract to be taken back in-house.

He said: “In the short term, Capita must urgently return this service to the required standard and must be held to account if they are unable to do so.

“But it is now obvious to all that civil service pensions are simply too important to be left in the hands of a company with such a dismal record of failure.”