Capita warns pension scheme costs could cut profits by up to £40m
11 reported
Capita has announced that fixing service failures at the civil service pension scheme could reduce annual profits by between £25m and £40m. The warning came a day after chief executive Adolfo Hernandez apologized to MPs for “very poor service” during a Commons committee hearing. The Guardian reported in January that newly retired civil servants were struggling financially because pension delays had left them without income for months. The government has withheld nearly £10m from Capita due to service shortfalls, and more than 6,700 retirement quote requests and 4,100 bereavement cases were outstanding at the end of last month. HMRC deputy chief executive Angela MacDonald told the public accounts committee that the cost of civil servants brought in to clear the backlog would be £12.5m. Paymaster general Nick Thomas-Symonds told MPs the government intends to recover all costs from Capita. The company’s shares fell nearly 21% following the profit warning.
What’s reported
Capita expects the pension scheme cleanup to reduce annual profits by £25m to £40m.
The government has withheld nearly £10m from Capita due to service failures.
More than 6,700 retirement quote requests and 4,100 bereavement cases were outstanding at the end of last month.
HMRC deputy chief executive Angela MacDonald said the cost of civil servants clearing the backlog would be £12.5m.
The government has lent £15.6m in hardship loans to 2,700 members awaiting payments.
Capita’s shares fell nearly 21% after the profit warning.
Capita chief executive Adolfo Hernandez apologized to MPs for “very poor service.”
Paymaster general Nick Thomas-Symonds said the government intends to recover all costs from Capita.
A Labour MP, Catherine McKinnell, told the hearing of a terminally ill pensioner who died still waiting for a quote since January.
Capita executives said the scheme has 1.7m members with extremely complex rules and processing is slowed by missing data.
Richard Holroyd, chief executive of Capita’s public service division, said he considered resigning but decided against it.
Key figures
Adolfo Hernandez, chief executive of Capita
Angela MacDonald, HMRC deputy chief executive
Nick Thomas-Symonds, paymaster general
Catherine McKinnell, Labour member of the public accounts committee
Richard Holroyd, chief executive of Capita’s public service division
Sources: The Guardian
