Civil service pensions mutual ‘on track’ despite delays

12 Sep 13
Whitehall’s first attempt to spin out a service into a mutual company is on track to achieve projected savings, but was beset by early delays and governance issues, the National Audit Office said today.

By Vivienne Russell | 12 September 2013

Whitehall’s first attempt to spin out a service into a mutual company is on track to achieve projected savings, but was beset by early delays and governance issues, the National Audit Office said today.

Auditors examined the creation of the MyCSP joint venture, which administers pensions for 1.5 million civil service employees.

It concluded that the mutual had the potential to be good value for money, saving 25% after seven years and reducing administration costs to £13 per member per year by 2019. 

The deal also meant that MyCSP now had a ‘credible’ plan to meet the challenges of the 2015 civil service pension reforms, including the need for improved data, the NAO said. It should also be able to offer an enhanced service to scheme members thanks to ‘significant investment’ in the service by the private sector partner Equiniti Paymaster and a payment mechanism that penalises MyCSP if it misses service standards stipulated in the contract.

But the watchdog highlighted several early problems, including an overly optimistic transaction timetable and financial problems. There was also a lack of clarity around governance, with the Cabinet Office not understanding its different roles. Auditors urged the department to learn from these experiences and continue to monitor the mutual closely in order to capture and disseminate all the lessons learned.

NAO head Amyas Morse said: ‘We recognise there is significant potential value in the MyCSP deal for the Cabinet Office and for scheme members.

‘But, given the challenges and the imminent pension changes in 2015, government will have to remain actively engaged as customer, shareholder and supplier to capture the full benefits of this deal and to ensure the risks do not revert back to government.’

The Cabinet Office welcomed the NAO’s findings, which it said validated the department’s cost-saving projections.

A spokesman added: ‘The report also highlights the benefits of better quality services which come with giving staff a say in the running of their organisation. Public service mutuals are appearing all over the country because nurses, social workers, probation officers and other frontline staff want the freedom to do their jobs as they know is best. 

‘With over 70 mutuals now delivering more than £1bn of public services, we are witnessing a quiet revolution in our public services – a revolution which is raising standards and cutting waste, which is what people care about.’

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