Capita loses out on £233m Teachers’ Pension Scheme contract to Indian IT firm

Outsourcing firm has run the pension scheme for 27 years, but also recently pulled out of teacher training contract

Outsourcing firm has run the pension scheme for 27 years, but also recently pulled out of teacher training contract

26 Jun 2023, 12:03

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Outsourcing firm Capita has lost its contract to run the teachers' pension scheme

Outsourcing company Capita has lost its government contract to administer the Teachers’ Pension Scheme (TPS) after 27 years.

A contract notice published by the Department for Education (DfE) on Friday shows Indian IT company Tata Consultancy Services will now administer the scheme under a 10-year, £233 million contract.

It comes despite Capita, which recently withdrew from delivering the government’s flagship teacher training and development programme to teachers, tendering to regain the contract.

DfE said it would “transition” the scheme to Tata over a two-year period from this October, with the new contract beginning in October 2025.

Capita took over the administration of teachers’ pensions in 1996 and was reappointed in 2011 under an £80 million contract.

A three-year £32 million extension was handed to the company in 2018. In 2021, it received a further four-year extension worth £60 million.

The same year, the DfE published a contract notice for the administration of the TPS.

The DfE said it evaluated bids through a “weighted consideration” of technical quality, social value and price.

“Given the scale and complexity of the [TPS], this approach was deemed most suitable by our business cases, as it enabled sufficient time and engagement with the market to ensure a fair and competitive procurement process,” it added.

Retender follows failures in pension administration

Schools Week revealed in 2020 that teachers’ pensions could be tens of thousands of pounds short because of administrative failures.

The investigation found some teachers were missing up to 80 per cent of their pensionable service, finding gaps from almost 30 years ago.

Others struggled to find information from schools that had closed, with the growth of academy rebrokers said to increase the “risk of errors” in the system.

At the time, DfE admitted it had no idea how big the problem was as it did not record how many corrections were made.

The TPS is managed by the department and administered under contract by a supplier.

Capita confirmed that it had bid to continue delivering the scheme.

Last month, however, Schools Week exclusively reported that it would cease to provide early career framework (ECF) courses starting from September after deciding not to continue.

The firm, which is currently one of six founding providers overseeing the rollout of the national scheme, declined to comment on why it made the decision.

But figures from Ofsted inspections in the ECF’s first year show Capita had much lower take-up of its training course compared to the five other providers.

New contract will provide more ‘automated’ service to teachers

Capita oversees several schemes on behalf of the department, including most recently a flexible working programme.

It also runs the SATs series in schools, which ran into several problems last year.

TPS is one of the largest pension schemes in the country. Tata already administers the government’s workplace pension scheme Nest.

In a statement, Tata’s president for financial products and platforms, Vivekanand Ramgopal said it was “delighted” to partner with the DfE to “digitally transform” the administration of the TPS.

“Enhanced customer service has been the cornerstone of our platform’s value proposition to clients in the UK pensions industry,” he added.

The DfE said the new contract would “provide a more automated, digitalised and personalised service to our members and employers”.

This included providing “enhanced” access to data and an “improved ability” to self-service pension processes.

Capita declined to comment.

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One comment

  1. Ash Zaver

    Teacher’s Pensions as an organisation is a shamble with Trust Pilot reviews scoring them 94% at 1 Star. I have absolute no faith in how the organisation functions as it stands today.
    If the Department for Education thinks that they are making progress by replacing Capita with TATA to run the administration then think again. This transition over the next two years is going to cause more chaos in providing timely service to members and the schools and colleges they work for. I am predicting that in no time the pension pot will dry out by TATA demanding high administration fees. It seems we are jumping from frying pan and into the fire. God help us all.