12.09.13
Civil service pensions mutual on track after shaky start – NAO
MyCSP, the civil service pensions mutual ‘spun out’ of the public sector, now looks better set to be value for money after initial bad planning, according to the National Audit Office (NAO).
MyCSP, which dispenses pension schemes for 1.5 million civil servants, started up in 2011.
The NAO said it was originally poorly governed with a shaky financial model – but recent changes mean it should now save a projected 25% after seven years.
The new deal should cut administration costs by 25%, to a cost-per-member £13 annually by 2019. Additionally, their private sector partners, Equiniti Paymaster, should help members receive better service. Furthermore, a penalising payment mechanism should be implemented that keeps MyCSP in check if it falls short of service standards.
The venture still faces challenges of transformation, especially the improving of data by the arrival of the 2015 new pension scheme. However, the new deal means MyCSP should be better prepared for these imminent reforms.
According to the NAO report, the Cabinet Office did not utilise well the opportunities gained from its time as a pathfinder, but has since instated an evaluation strategy. The transaction initially did not take off well due to sub par data, infrastructure and planning on top of a complex deal.
When ‘spinning out’, Equiniti Paymaster gained 40% of MyCSP, with 25% handed over to employees. The Cabinet Office kept the remaining 35% and worked out a seven year deal to sell pension administration services back to itself. In the first two years since its inception, MyCSP has paid £4.9bn to scheme members.
Amyas Morse, head of the NAO, said today: “We recognise there is significant potential value in the MyCSP deal for the Cabinet Office and for scheme members. But, given the challenges and the imminent pension changes in 2015, Government will have to remain actively engaged as customer, shareholder and supplier to capture the full benefits of this deal and to ensure the risks do not revert back to Government.
“The Department also needs to persist with its evaluation strategy to learn fully from this ‘pathfinder’ transaction and disseminate the lessons.”
MyCSP’s former chief executive, Phil Bartlett, has previously written for PSE – for his article, ‘The story of mutuality from inside a mutual’, click here.
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