The Scheme is very sorry for the delays in setting up and paying your death benefits (this may be a death benefit lump sum or spouse, civil partner and/or dependant pensions). We acknowledge that the process has taken longer than expected.
In recognition of the current delays, the Scheme has put in place a temporary process to apply interest when death benefits are paid more than four months after the date of death, backdated to three months after the date of death.
This applies to death benefit payments paid by Capita from 1 December 2025. Interest will not apply to death benefit payments that the previous administrator paid before 1 December 2025.
Example 1: A member died on 31 October 2025 (when MyCSP was the administrator). The processing of death benefits to beneficiaries was delayed and finally put into payment on 1 May 2026 (after Capita had taken over the administration). Any arrears of death benefits will be backdated to the date of death, with interest applying from 1 February 2026.
Example 2: A member died on 30 April 2025 (when MyCSP was the administrator). The processing of death benefits to beneficiaries was delayed and finally put into payment on 1 September 2025 (when MyCSP was still the administrator). Any arrears of death benefits will be backdated to the date of death, but is not in scope for an interest payment.
Example 3: A member died on 15 December 2025 (when Capita was the administrator). The processing of death benefits to beneficiaries was delayed and finally put into payment on 15 April 2026 (after Capita had taken over the administration). Any arrears of death benefits will be backdated to the date of death, but is not in scope for an interest payment.
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 the date of death and the date when the full benefits are paid.
When will the interest payment be calculated and paid?
The priority for the Scheme is ensuring that the death benefit payments are paid as quickly as possible; interest will be calculated once this has happened.
We will write to you again to confirm the interest amount, payment date, and taxation information for the interest payment. The Scheme plans 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 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 the late payment of death benefit 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: 24 March 2026
