Bereaved civil service families could face ‘unjust’ tax bills due to pension scheme delays
Summary
Delays in the civil service pension scheme, managed by the company Capita, are causing some families of deceased civil servants to wait over 100 days for payments. If payments take longer than two years, families may face tax bills on amounts that should be tax-free.Key Facts
- Lump sum pension payments to bereaved families are tax-free only if paid within two years of the death report.
- More than 1,600 families are waiting for over 100 days for their pension claims to be processed.
- Delays are caused by administrative problems within the civil service pension scheme, outsourced to Capita.
- The Public Accounts Committee says the current delays could mean many families pay tax unfairly.
- The Cabinet Office cannot stop tax charges caused by delayed payments but says affected people can appeal to the Pensions Ombudsman.
- The Pensions Ombudsman currently has an 18-month backlog to handle complaints.
- The pension scheme was previously outsourced to other private companies, which also struggled with service.
- The government is holding back nearly £10 million of payments to Capita until better service is shown.
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