Capita reports up to £40 million pension contract shortfall

Capita said contract shortfalls on the UK Civil Service pension scheme will reduce its 2026 underlying operating profits by between £25 million and £40 million. The company also said free cash flow will fall by £35 million to £50 million because of the issues and the added spending required to clear the backlog.

Capita missed the June 30 deadline to deliver terms under the £239 million contract signed in 2023. Officials have withheld nearly £10 million in payments and imposed monthly sanctions while the firm works through the backlog. Cabinet Office data showed more than 6,700 retirement-date quotations and 4,100 bereavement cases still outstanding on the 1.7 million-member scheme.

Chief executive Adolfo Hernandez said the service has not been good enough and remains the firm's top priority. He added that Capita is working closely with the Cabinet Office to address all aspects of the scheme. Shares in Capita fell 18 percent on Wednesday to their lowest level in nearly a year after the trading update.