Bereaved families of civil servants may face significant tax bills due to delays in the civil service pension scheme, which is managed by Capita. MPs have raised concerns that the ongoing issues could result in some claims missing the tax-free time limit for lump sum payments.

Key Issues

  • Tax-Free Time Limit: Lump sum pension payments are tax-free only if made within two years of the member's death.
  • Delays in Processing: Families of over 1,600 deceased civil servants have been waiting more than 100 days for their claims to be processed.
  • Financial Strain: Some families are struggling to pay bills due to these delays.

Statements from MPs

Geoffrey Clifton-Brown, the Conservative MP and chair of the Commons public accounts committee (PAC), stated:

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"The chaos currently engulfing the civil service pensions scheme means that the likelihood of death benefit payments being made within two years is slim. It is unconscionable that the families of loyal and dedicated civil servants, who are continuing to suffer through this serious government failing, could potentially face such an unjust financial penalty."

Government Response

The Cabinet Office, responsible for the pension scheme, indicated that it cannot prevent HM Revenue and Customs from taxing delayed claims. Affected families may need to seek redress through the Pensions Ombudsman, which currently has an estimated 18-month wait for case resolution due to a high volume of complaints.