Capita Warns of Up to £40m Hit After Civil Service Pensions Failings

Overview

• Capita failed to meet a June 30 deadline to deliver the £239 million Civil Service pensions contract after earlier missed targets, leaving more than 6,700 past-retirement quotations and about 4,100 bereavement cases outstanding.
• The Cabinet Office has sent a 140-strong surge team to clear the backlog, withheld nearly £10 million in payments, is applying monthly sanctions and is arranging independent reviews and a remedial adviser to oversee recovery.
• Capita chief executive Adolfo Hernandez apologised to MPs and was sharply questioned by the Public Accounts Committee over the company’s handling of the 1.7 million-member scheme.
• In a trading update published Thursday, Capita said the contract problems will reduce 2026 underlying operating profit by £25 million to £40 million and cut free cash flow by £35 million to £50 million, prompting a steep share price fall.
• Unions, MPs and officials have called for the contract to be removed or insourced, citing member hardship from missed payments and wider concerns about oversight of large government outsourcing deals.