Capita Shares Plunge 16% After Government Blasts Pension Scheme “Failings”

Shares in outsourcer Capita (LON: CPI) crashed over 15.8% on Tuesday morning, falling to around 273.5p, after the company was forced to publicly apologise following a Ministerial Statement over its handling of the Civil Service Pension Scheme (CSPS) contract.

In an update to Parliament on Monday, Paymaster General Nick Thomas-Symonds said Capita had been “completely unprepared” when it took over administration of the scheme, with its systems becoming “overwhelmed” and a backlog of unresolved cases peaking at 120,000.

The minister confirmed the government has withheld £9.9 million in payments to Capita and will seek to recover the cost of deploying more than 140 Cabinet Office officials to help clear the backlog, declaring bluntly that “public money will not fund Capita’s failings.”

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He added that officials have been instructed to examine longer-term options for the contract, including bringing the service back in-house, though he stopped short of immediate termination, warning it could trigger a “catastrophic operational vacuum.”

Responding before markets opened, Capita said it “recognises the service has not been good enough,” particularly for members awaiting bereavement, retirement and quotation cases, and apologised “for the distress and inconvenience experienced.”

The group said it now has “the processes, automation and technology in place” to clear the remaining backlog, and that it is assessing the implications of the ministerial statement, promising further market updates if required.

Investors reacted swiftly, wiping roughly £50m-plus off the company’s market value in early trading as shares hit session lows of 271.5p, down from Monday’s 325p close.

The saga adds fresh pressure ahead of Capita’s previously scheduled trading statement, due later this week, which will detail progress against the group’s strategic turnaround priorities—now likely to be overshadowed by questions over its public-sector contract performance.