Summary

• Ministers say Capita failed to deliver the AI-enabled pension administration service promised under its government contract.
• A remedial adviser's report and an interim independent audit have identified weaknesses in technology, planning and operational oversight.
• The Cabinet Office has gained direct access to Capita's systems, with a five-part recovery plan and fortnightly performance reporting.

Government outsourcing contractor Capita has failed to deliver the AI-enabled pension administration service promised to the Cabinet Office, according to ministers, who have introduced direct operational oversight following independent investigations into the troubled contract.

Cabinet Office parliamentary secretary Sally Jameson told MPs that the technology intended to support extensive automation had not been delivered as promised. The failure has contributed to persistent delays affecting civil servants, pensioners and their families, with approximately 1,800 complex cases remaining unresolved for more than a year.

The government has received a report from a remedial adviser appointed at Capita’s expense, alongside an interim report from an independent auditor. The findings identify inadequate technology, weak recovery planning and shortcomings in the contractor’s ability to understand demand, staffing capacity and operational performance.

Cabinet Office officials now have direct access to Capita’s systems and data, enabling them to examine outstanding cases and verify performance information. The contractor remains responsible for delivering the service, while the government is introducing a revised recovery plan and fortnightly reporting on unresolved work.

Automation did not match the contract’s ambitions

Capita was awarded the Civil Service Pension Scheme administration contract in 2023 and assumed responsibility for the service in December 2025, following the transition from the previous administrator, MyCSP.

The contract was intended to modernise administration through digital systems and automation, reducing the manual effort required to process routine transactions. Pension administration involves calculations, employment records, correspondence, benefit entitlement and complex decisions that may depend on information accumulated over several decades.

Automation can help when records are complete and the rules governing a transaction are clearly defined. Systems may be able to check information, calculate routine benefits or route cases to the appropriate specialist team without repeated manual intervention.

Complex cases are less straightforward. Employment histories may be incomplete, scheme provisions can change over time and individual entitlements may depend on historic service, pension remedies or records held by several organisations.

Successful automation therefore requires dependable data, accurate rules and processes for identifying cases that cannot safely be completed without specialist attention. A system that processes simple cases rapidly can still leave an unacceptable backlog if difficult cases receive inadequate support.

Jameson told Parliament that the contractor had failed comprehensively to deliver on its promise of an AI-enabled service. The remedial adviser concluded that the technology available to Capita was insufficient for the operating model on which the service depended.

That assessment concerns the failure to provide promised capabilities, not evidence that an operational AI system caused the incorrect pension calculations or delayed payments. Ministers have acknowledged some recent improvements in automation, although the service remains substantially below the required standard.

Recovery statistics conceal unresolved cases

Capita missed recovery commitments in April and June before reporting that it had achieved further self-imposed milestones during September. Ministers challenged those claims because they did not match the continuing experiences of scheme members.

A central disagreement concerns Capita’s distinction between workable cases and those requiring additional information. The contractor reported progress against cases it considered ready for processing, while other requests remained unresolved because of missing records, third-party dependencies or specialist requirements.

Classifying a case as unworkable may describe a genuine processing obstacle, but it does not remove the obligation to resolve that obstacle. Members waiting for benefits still need a reliable explanation, a route to obtaining missing information and progress towards payment.

The government’s 5 October update showed more than 1,900 cases in four priority categories that had been outstanding for over 100 days. The later parliamentary statement identified approximately 1,800 complex cases remaining unresolved for more than a year, while noting that some individuals had more than one case.

These figures describe different populations and thresholds and should not be combined into a single backlog total. They nevertheless demonstrate why performance cannot be assessed solely through the number of transactions completed within standard service targets.

Incorrect pension quotations can create further problems. An inaccurate calculation may need specialist revision, while an individual making retirement decisions may be unable to establish the income available to support their plans.

Bereavement and death-in-service cases carry additional consequences, particularly where families depend on payments following a death. Delays can also complicate tax treatment and other financial arrangements, increasing the importance of accurate information and timely resolution.

Government officials gain access to contractor systems

The new recovery programme contains five workstreams. Three address cases of different complexity, another covers major exercises including the McCloud pension remedy, and the fifth concentrates on the technology and infrastructure supporting service delivery.

Cabinet Office experts are working directly with Capita to establish priorities, improve case handling and examine the data used to report progress. Every member with a complex case is expected to receive correspondence explaining their position and the support being provided.

The government is also introducing more detailed public performance reporting, including the age of outstanding complex cases, the handling of straightforward transactions and other unfinished tasks.

Direct access to operational systems should make it easier to compare reported progress with underlying case records. It could also reveal whether a case described as closed has resulted in a completed calculation, an appropriate response or payment to the member.

The remedial adviser’s findings identified weaknesses in forecasting demand and matching resources to the work required. Addressing those shortcomings involves improving data, workflows and management processes as well as deploying additional technology.

Nearly 150 government staff have previously been mobilised to support recovery activity. The Cabinet Office has also withheld almost £10 million in contractual payments, while Capita has voluntarily reduced its monthly invoicing by 10% until acceptable service levels are restored.

Future delivery remains under examination

The government is considering whether core pension administration should return to public sector control. Officials have been instructed to examine different models of insourcing, drawing on experience elsewhere in government.

Moving responsibility between organisations would involve transferring operational knowledge, records, systems and specialist personnel. Undertaking that work while significant backlogs remain unresolved could introduce further disruption, so ministers have not announced an immediate transfer.

Capita remains contractually accountable for recovery, regardless of the delivery model eventually selected. The government’s revised arrangements aim to combine closer scrutiny with practical improvements to case management and technology.

The contractor has begun introducing additional automation and digital tools, including functions allowing some dependants to access information and make enquiries online. Those improvements may support routine processing, but their contribution to resolving longstanding complex cases will require separate measurement.

The Cabinet Office intends to publish performance figures every two weeks until the service has stabilised. With officials now able to inspect operational records directly, the next reports should provide a clearer test of whether the recovery plan is reducing unresolved cases and restoring the accuracy and reliability of pension administration.