Capita clinches £239m civil service pensions contract

The news comes despite a security breach in March which exposed pension data

Capita has secured a £239 million 10-year contract from the UK's Cabinet Office to manage the Civil Service Pension Scheme (CSPS), providing a much-needed boost to the beleaguered tech services company.

Despite a security breach in March which exposed pension data to criminals, the CSPS appears confident in Capita's capabilities.

Modernising pension admin systems

The contract, effective from September 2025, involves modernising pension administration systems through "enhanced system design and digital innovation," according to Capita. The company also plans to integrate generative AI to offer personalised and engaging digital channels for pension holders as they prepare for retirement.

Capita aims to enhance the overall customer experience, providing intuitive interactions for both clients and pension members while supporting a data-driven approach for scheme employers.

In addition to overseeing the CSPS, Capita will manage pensions payroll admin services related to the Civil Service Compensation Scheme and the Civil Service Injury Benefit Scheme, along with associated finance and accounting services.

Jon Lewis, Chief Executive Officer, Capita, said: "With generative AI we can deliver new levels of personalisation for all CSPS members." Lewis is stepping down at the end of this year, to be replaced in January 2024 by Adolfo Hernandez, currently of AWS.

Digital burglary

This government contract comes after Capita faced a digital burglary in March, where criminals accessed its infrastructure, prompting the shutdown of some systems.

Although the exact entry route remains undisclosed, ransomware gang Black Basta claimed responsibility for the attack. Capita initially reported 4% of its servers being accessed but later revised that figure down to it to 0.1%. The breach raised concerns about the security of pension data, leading the Pensions Regulator to advise clients to communicate directly with Capita. The estimated cost of addressing the breach is around £25 million, and 90 organisations have reported data breaches as a consequence of the Capita breach.

Despite this incident, Capita continues to administer 450 pension schemes in the UK, serving 4.3 million members.