The Scheme is very sorry for the delays in setting up your retirement benefits and acknowledges that the process has taken longer than it should have.
In recognition of the current delays in setting up and paying your retirement benefits, the Scheme has put in place a temporary process to apply interest when the full benefits are paid more than one month after your retirement date.
This applies to retirements processed and paid by Capita from 1 December 2025. This policy does not apply to retirements processed and paid by the previous administrator before 1 December 2025.
Example 1: A member left service and selected a retirement date of 15 October 2025 (when MyCSP was the administrator). The processing was delayed and their pension was finally put into payment on 15 March 2026 (after Capita had taken over administration). That member is in scope and will receive arrears back to October 2025 plus interest from that date.
Example 2: A member left service and selected a retirement date of 15 January 2025 (when MyCSP was the administrator). The processing was delayed and their pension was finally put into payment on 15 June 2025 (when MyCSP was still the administrator). That member will have received arrears in June 2025 back to January 2025, but is not in scope for an interest payment.
Example 3: A member left service and selected a retirement date of 15 December 2025 (when Capita was the administrator). The processing was delayed and their pension was finally put into payment on 15 May 2026 (after Capita had taken over administration). That member is in scope and will receive arrears back to 15 December 2025 plus interest from that date.
What interest rate will be used?
The interest rate that will be applied will be based on the Bank of England base rate plus 1%, for the period of the delay between your retirement date and the date when your full benefits are paid.
When will the interest payment be calculated and paid?
The priority for the Scheme is ensuring that your normal monthly pension is set up as quickly as possible, with any arrears payment due, plus a lump sum if you have selected this option - the interest will be calculated once this has happened and applied from the date the original payment should have been made.
We will write to you again to confirm how much interest will be paid to you, when it will be paid and some information on the taxation of the interest payment – the Scheme plan to commence processing interest payments from April 2026.
Will the interest payment be taxed?
In the vast majority of cases, no income tax will be deducted from the interest payment before making payment to you. However, tax may still be payable on it depending on any other income and interest that you may have received during the tax year to which the interest relates. If you are required to submit a Self-Assessment tax return, then you must include details of this interest payment on it. You can check whether you need to submit a Self-Assessment tax return on the Government’s website: https://www.gov.uk/check-if-you-need-tax-return.
Even if you do not complete a Self-Assessment tax return, if this interest together with any savings income received in respect of interest paid on your UK banks and building societies, exceeds your Personal Savings Allowance, then you need to contact HMRC to let them know about the payment. Further information about the Personal Savings Allowance can be found here: https://www.gov.uk/apply-tax-free-interest-on-savings.
If you live outside the United Kingdom, the Scheme must deduct tax at source at the basic rate.
How long will the Scheme apply interest for late payment of retirement payments?
The Scheme Manager, the Cabinet Office, will keep this under review, and this web page will be updated accordingly.
Do I need to contact the Scheme about the interest payment?
No, as noted, we will write to you again to confirm when the interest payment will be paid to you.
Date Updated: 16 March 2026
