A series of system and communication errors led to delayed pension payments to civil servants after administration was moved to MyCSP, a National Audit Office (NAO) report says.
The NAO (to read the report click here) said that many scheme members and participating employers expressed dissatisfaction with the services provided by MyCSP when it took over the administration in September 2014 from third-party administrator Capita. Some members received late pension payments and had difficulties contacting MyCSP, it said.
The report cited four factors that in combination made the transfer of members to an in-house system run by MyCSP more challenging than it should have been.
These were poor IT systems at MyCSP, miscommunication between both administrators, poor member data and the Cabinet Office being under resourced.
NAO head 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 and a large backlog of work built up. 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."
Between September 2014 and March 2015, MyCSP failed to answer 99,408 calls as a backlog of work grew at MyCSP. The NAO said MyCSP did not have sufficient staff to process the 14,000 items of work inherited from Capita and up to 40,000 data issues requiring attention caused by migration of the system.
A backlog grew between September 2014 and January 2015, peaking at 22,000 urgent cases in January 2015. The backlog of urgent cases was cleared in March 2015.
However, by September 2015 MyCSP had returned performance levels to where they were before migration, according to the NAO. MyCSP's monthly progress report showed that call-handling had improved to pre-migration levels at 96%. Complaints, while still high with 428 received during the month, were falling, the NAO said.
In response to the report a MyCSP spokesman said in a statement: "We recognise the findings of the NAO report published today. 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 1.1 million 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 NAO 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.
"Service to members remains our utmost priority and we will continue to work with the scheme manager (Cabinet Office) and employers to deliver towards that aim."
A Capita Employee Benefits spokesperson said in a statement: "We welcome the publication of the NAO report which provides much needed clarity about the transfer of service from Capita to MyCSP. Capita actively engaged with, and supported, MyCSP throughout the migration project. The migration date was delayed at MyCSP's request."
"Since service commencement in October 2002, Capita had not incurred any financial penalties until August 2014. MyCSP postponed the migration of the service from July to September 2014 which resulted in additional workload to assist in the migration activity, and also presented a resource challenge as many employees had already made plans to leave Capita when they expected the service to migrate in July 2014."
A Cabinet Office spokesperson added: "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."
On what pension schemes could take from the NAO report about administration generally, a spokesperson for The Pensions Regulator said: "The report highlights the importance of robust governance and administration of pension schemes in delivering good outcomes for members. In particular, good record-keeping is critical in ensuring that the right benefits are paid to the right members at the right time.
"Our recently published research shows that public service pension schemes have made good progress in putting in place processes to ensure they meet their new governance and administration duties but are slower to take action - we urge all schemes to measure themselves against the requirements of the record-keeping regulations and develop a plan of action to address issues, without delay."
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