Capita said failures on its civil service pensions contract will cut annual adjusted operating profit by £25 million to £40 million and reduce free cash flow by £35 million to £50 million this year.
Capita said failures on its flagship civil service pensions contract will reduce annual adjusted operating profit by £25 million to £40 million ($33.51 million to $53.61 million) and cut free cash flow by £35 million to £50 million this year, deepening the fallout from a dispute that had already sent its shares down more than 15% earlier in the week. The UK government had withheld £9.9 million ($13.24 million) in payments tied to the contract, citing missed deadlines and failure to deliver AI-led technology improvements. UK Paymaster General Nick Thomas-Symonds said system failures had left 120,000 cases unresolved, with more than 6,700 pension quotations for past retirement dates still outstanding and 4,100 bereavement cases unresolved after Capita missed April and June deadlines to clear inherited arrears. Capita, which provides support services to UK public and private sectors, said the service had "not been good enough," particularly for members waiting on bereavement, retirement and quotation cases, and said it now has the processes, automation and technology needed to work through the backlog. The government has started appointing an independent auditor and a remedial adviser to investigate the failures, and is considering whether the pension scheme should be brought back in-house.