Is the Civil Service Capita problem stopping coverage of other poor schemes.

Moonwolf

(sorry - just a rant)

Are the problems with the civil service pension scheme causing so much noise that other less bad schemes are not being looked at?

My NHS 2015 pension is now 3 months late. I received an email apologising for the delay and assuring me that 84% of recipients in December were paid within 30 days of the due date and most were paid 23 days after that.

I’m not convinced that an apology telling me what proportion of other people were actually paid on time is particularly comforting.

I’m not convinced that 84% paid on time is a particularly high achievement and for some people will be causing real hardship.

While I can manage by not spending as much; drawing from my cash ISA; or drawing from my DC pension or stocks and shares ISA, all have at least an opportunity cost to me. Particularly drawing extra from investment based savings at a time of volatility.

At the moment I’m just irritated and clearly the Capita victims have it much worse, but that irritates me as well, while Capita is doing so badly it seems there is no pressure on the NHS scheme to improve.

Universidad

I used to consider these public sector schemes a bit ramshackle but ultimately pretty bulletproof.

Watching multiple public sector schemes fail utterly to discharge their legal obligations over the last few years without anything really significant happening as a result has me spooked.

It makes me wonder if a rogue parliament could simply retroactively change the terms of some of them, without the pushback I would previously have expected.

hugheskevi

Although the administration of the schemes is by different entities, there are some common issues facing schemes:

• Multiple new schemes in quick succession - this has varied across schemes, but many new schemes have been introduced at gaps of just 5-10 years over the last 30 years. For example, the Civil Service had only the classic scheme for nearly 30 years, then between 2002 - 2015 we had Premium, Classic Plus, Nuvos, Partnership and Alpha. A new scheme sounds simple, but it significantly increases the administrative burden as each scheme has its own rules and requirements. When survivor benefits are taken into account, it will take over 100 years for a scheme to reduce to zero members after it is closed to new accrual.
• The problem above is compounded by a tendency to leave existing staff in a legacy scheme rather than move them to a new scheme. The 2015 scheme change was the exception to this.
• Even when existing staff were moved to the new 2015 scheme, they remained active in the legacy scheme rather than hard-closing the legacy schemes. That meant a final salary link was retained, Added Years and Added Pension arrangements to pay continued. That all gives more opportunities for mistakes to be made by employers or administrators.
• The McCloud judgment is a monumental undertaking. Huge sections of rules, even tax rules, have had to be written or rewritten. This is a big issue as not only does that take time, but there is no case law to draw upon for inevitable grey and complex areas.
• The 2015 Remedy being retrospective further complicates matters. Data may not have been collected as it was not needed at the time, but now is required, and that data might be from a decade ago.
• The above is in a context where the pension rules are constantly changing - Lifetime Allowance, Annual Allowance, Lump Sum Allowance, Minimum Pension age, Inheritance Tax, and Pension Dashboards are all changes that need to be administered.
• The endless work on Guaranteed Minimum Pension and contracting out reconciliation, rectification and equalisation for service between 1978-97 has also been in the background, and is a huge amount of work.

So whilst there is no doubt the administration is poor, the reasons and responsibility for that may be wider than is usually discussed.

QrizB

When survivor benefits are taken into account, it will take over 100 years for a scheme to reduce to zero members after it is closed to new accrual.

I'm reminded of the fact the US Government was still paying Civil War dependent pensions until 2020. Hostilities ceased in 1865.

https://en.wikipedia.org/wiki/Irene_Triplett

Moonwolf

https://forums.moneysavingexpert.com/discussion/comment/81942148#Comment_81942148

My private sector DB scheme has a reduced pension if the spouse in more than 10 years younger, but if I was single I think I could marry a 20 year old now and they would get half my pension when I died.

Moonwolf

https://forums.moneysavingexpert.com/discussion/comment/81941986#Comment_81941986

This is very fair and I suppose it is difficult to ramp up staffing for the issue.

It doesn’t make it any less personally annoying.

ewaste

I think we also need to also keep in mind that Administration isn't a priority so it gets cut, underfunded, underappreciated and outsourced. That is especially the case in the UK over the past few decades. While we all complain very few are willing to accept higher costs or any responsibility.

PensionsStuff

The biggest problems for me are two fold.

Ever increasing and endless high level project/ data work (GMP, dashboards, buy outs, data cleanse etc ) leads to job openings in "non-admin" roles (no phonecalls/emails/direct contact with members which is attractive to many, but often better paid even at the same seniority level) which takes experienced pensions admin staff away from those teams at a rate faster than new people can be brought in.

Administration staff are by and large a fixed cost entity, other than some contractual agreements whether you have 100 phone calls and 100 cases a day or 200 of each, you get a fixed fee, pension companies unfortunately therefore try to cost save on admin staff, and pension trustees buy into this by (often rightly due to Scheme funding) choosing the lowest cost option .

Spare a thought for all the other capita teams/offices who i have absolutely no doubt have had any tiny sliver of spare resource they have taken to fix these issues leading to delays and SLA issues of their own, those pension schemes just won't get their name in the paper however.