The probe was launched after many scheme members and participating employers expressed dissatisfaction with the services provided by the pension administrator following the switch from Capita in September 2014.
Auditors stated that their initial inquiries led to dozens of individual stories about late payments, problems getting in touch with MyCSP and failure to provide accurate and timely information on pension entitlement. In some cases, members who were waiting for a retirement quotation or new payment did not receive their quotation or payment until after they retired.
When the first pension payments were due to be made in September 2014, the review found that 14,703 pensioners who lived overseas were paid pensions up to seven days late, and 99 were not paid at all until the next month or later. This was because MyCSP did not fully understand the payment practices it inherited, meaning it did not issue the payments in time to allow for the extra time needed to make an international payment.
In addition, a backlog of work grew at MyCSP as the firm did not have staff to process the 14,000 items requiring action that had been inherited from Capita, as well as 40,000 data issues requiring attention following the migration. This peaked at 22,000 urgent cases in January 2015, but was cleared in March 2015 after the Cabinet Office told MyCSP to tackle the backlog.
Performance did not return to its previous standard until September 2015, a year after the switch in systems.
Despite this, MyCSP received no financial penalty for its performance because the Cabinet Office told auditors they had suspended charges that if imposed, would have amounted to around £90,000.
Auditor general Amyas Morse said when MyCSP took over the administration of the civil service pensions payroll in September 2014 it did not cope with the workload.
“Some people were paid late and members struggled to contact MyCSP. Some reported hardship and distress. The problems were made worse by longstanding limitations in the membership data on which I have reported over the last five years,” he added.
“MyCSP’s performance is now back to a steady state but the underlying data problems have still not been fixed. This should now be a priority for the Cabinet Office, MyCSP and the employers.”
Responding to the report, a Cabinet Office spokeswoman said: “We are aware of the performance issues with the civil service pension programme from around a year ago. These originated from the payroll transfer from Capita to MyCSP in September 2014 and led to a significant dip in service and delays in processing pensions.
“Once the Cabinet Office was fully aware of the extent of the problem we took definitive action and instructed MyCSP to take action and track its progress. This successfully cleared the backlog and brought performance back towards acceptable levels. We recognise that there are still some underlying data problems and we are developing a data improvement strategy as a matter of priority.”
A MyCSP spokeswoman said the firm “recognise the findings of the National Audit Office report published today”.
She stated: “In reference to the findings, it has been well documented that a number of factors led to the reduction in service levels, including a communication to 1.1m members which resulted in significantly increased call volumes and a corresponding impact on ‘business as usual’ workload.
“In response, MyCSP and Cabinet Office agreed a number of actions to manage and improve service levels such as recruiting new members of staff (including apprentices), increasing enquiry centre opening times and establishing an in-house training academy.
“MyCSP is pleased to confirm that, as detailed by the National Audit Office report, performance is now back to a steady state. Call handling levels have been back to normal for the past six months, with a corresponding reduction in member complaints, significantly down from their peak at the time of the service challenges.”
Dave Penman, general secretary of the FDA union for senior civil servants, said members had endured delays in pension payments.
“We welcome the NAO’s investigation and support its recommendations – in particular the prioritisation of a thorough data cleansing exercise that is crucial to members getting the pension they have saved for, and for taxpayers to be confident in the proper cost management of the scheme.”
The Public and Commercial Services union representing rank-and-file civil servants said the mutualisation of MyCSP was “textbook case” of how not to reform public services.
“It is disappointing that the involvement of [private sector partner] Equiniti has not been fully scrutinised, but this report should make sobering reading for minsters who pursue privatisation for political reasons,’ said PCS general secretary Mark Serwotka.
