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British teachers’ pensions set to be released from Capita’s grasp after nearly 30 years

The UK’s Department for Education is to retender the outsourcing contract for teachers’ pensions in a deal worth £185m to replace a relationship with Capita that has lasted 25 years.

According to a tender notice published late last week, Whitehall is on the hunt for a new contractor to run the Teachers’ Pension Scheme (TPS).

The department is looking for a TPS administration that “will be accepted as the best administered UK public service pension scheme.”

The contractor will be expected to provide “an effective, fully digital, personalised service to our members,” the notice said. It stated that software and IT services are included as part of the contract.

The deal is set to last 10 years, with an option to extend for an additional five, although the tender notices did not say when it is expected to start. The Register has asked for clarification.

Capita, the incumbent supplier, has been running the service since 1996. It was reappointed in 2011 in a contract worth £80m.

That contract was due to last until 2018, but in May that year Conservative minster Nick Gibb said a contract extension would be awarded for £32.3m to run the service until 2021.

“The TPS contract with Capita is the largest single contract managed by this department and has been rated platinum quality by the Cabinet Office and ‘low cost, high quality’ by external benchmarking,” he said.

That contract was again extended in 2020 when Capital signed a four-year deal worth £60m taking it up until 2025.

The TPS collects contributions from over 11,200 employers, and the calculation and payment of pensions to more than 700,000 beneficiaries. Capita also manages the schemes for both deferred and active members, totalling a further 1.3 million people. It is currently run by Capita’s Employee Benefits business in Darlington, which forms part of the company’s People Solutions division. ®

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