The Cabinet Office plans to support some Civil Service pensioners with “hardship loans” as administration provider Capita struggles to cope with a backlog of tens of thousands of cases.
Members of the Civil Service Pension Scheme (CSPS) have faced delays to payments since Capita officially took over administration of the scheme on 1 December 2025, with many experiencing financial hardship as a result, according to the Public and Commercial Services (PCS) Union.
Capita has acknowledged the delays, as well as reporting that many members are struggling to log in to the CSPS online member portal.
The union said in a press release today (29 January) that the Cabinet Office had agreed to provide “interest-free hardship loans for civil servants who have been left without their pensions due to unacceptable delays in payment”.
It added: “PCS sees this as a first step and expects further support to follow. Our retired members should not be forced to rely on loans because of systemic failures outside their control.”
Pensions Expert has contacted the Cabinet Office for comment.
“Capita and the Cabinet Office are deeply sorry for the worry, frustration and distress this has caused – particularly for those dealing with bereavement or ill health.”
Joint statement from Capita and the Cabinet Office
Angela MacDonald, deputy chief executive at HM Revenue & Customs, has been asked to lead an “urgent recovery plan”, which entails prioritising those in financial hardship, ill-health retirements, and bereavement cases.
In addition, 150 additional staff are being seconded to Capita to help with addressing a backlog of 86,000 cases that it inherited from the previous administrator, MyCSP, which is part of Equiniti.
Capita said it hoped the measures would allow it to restore services for “the most urgent cases” by the end of February. The PCS Union said bereavement support services should be fully restored by 12 February.
In addition, the administrator is also carrying out a “distinct project” to finish the implementation of the McCloud remedy for the CSPS. This will involve communicating with 95,000 members about their benefit choices.
Union demands compensation for affected members
The PCS Union said the backlog would take “months” to clear and called for a compensation scheme to be set up to support members who have experienced delays to pension payments.
“A full compensation scheme must be introduced to cover interest on overdue payments, additional financial costs, and the distress and inconvenience suffered,” the union stated.
“The government must properly resource the Civil Service Pension Scheme, deliver compensation, and seriously consider bringing the service back in-house to prevent this happening again.”
Fran Heathcote, PCS
PCS general secretary Fran Heathcote said: “Civil servants who have been left in financial hardship because of delays receiving their pensions should never have been put in this position in the first place.
“PCS has been pushing relentlessly for urgent support, and while we welcome the introduction of hardship loans, this does not undo the damage already done.
“Our retired members should not have to wait months for money they have worked and paid into all their lives. The government must now go further – properly resource the Civil Service Pension Scheme, deliver compensation, and seriously consider bringing the service back in-house to prevent this happening again.”
PCS and other civil service unions are meeting with CSPS management regularly to communicate concerns and monitor progress.
‘Not the service members deserve’
In a joint statement published yesterday (28 January), Civil Service chief financial officer Catherine Little and Capita chief executive Adolfo Hernandez acknowledged the delays and access issues.
A “significant proportion” of the backlogged cases were already overdue, the joint statement said, leading to “higher than expected volumes of calls and complex queries, which created further issues”.
“This is not the service members deserve,” Little and Hernandez stated. “Capita and the Cabinet Office are deeply sorry for the worry, frustration and distress this has caused – particularly for those dealing with bereavement or ill health.”
The statement added: “Both Capita and the Cabinet Office take this responsibility very seriously and are urgently working together to put this right.”
This article was updated on 29 January 2026 to reflect the announcement of the hardship loans plan.
