Lord Coaker, Minister of State at the Ministry of Defence, has said investigations are examining the root causes of Armed Forces pension errors and whether contracts were breached, with remedies to be considered afterwards, according to an answer given in Parliament.
Lord Bourne of Aberystwyth, a Conservative peer, asked what assessment had been made of contractual provisions with Equiniti Paymaster and Sopra Steria over the miscalculation of pensions, and whether those contracts would be renewed. Lord Coaker gave the same answer to both questions, saying: “The Ministry of Defence (MOD) contract for the provision of pension administration services is held by Sopra Steria Ltd (UK). Equiniti Paymaster delivers pension payment services as a subcontractor to Sopra Steria Ltd (UK) and does not have a direct contractual relationship with the MOD.
“The contract with Sopra Steria is based on the Model Services Contract, a template contract developed by the Cabinet Office for complex contracts. It is suitable for use with the range of business services that government purchases and contains applicable provisions for contracts for business process outsourcing and/or IT delivery services.
“The Cabinet Office regularly reviews the documents that make up the Model Services Contract to ensure they reflect changes in regulation, law, and policy. The complexity of pension calculations means investigations are ongoing to establish the root causes of pension calculation errors and whether any contractual obligations have been breached.
“The circumstances are complex and, in some cases, relate to periods prior to the commencement of the current Sopra Steria contract in May 2020. The department will consider any potential contractual remedies in light of the findings of these investigations and the applicable contractual and legal framework. Therefore, it would be premature to comment further while this work remains ongoing.
“Looking ahead, the MOD is considering future delivery arrangements for Armed Forces pension services ahead of the expiry of the current contract in May 2029. The Armed Forces and Veterans Future Shared Services Programme is developing strategic direction for the future delivery of pension administration and its supporting technology through an Outline Business Case, which will include an appraisal of the full range of options.
“These proposals are subject to the appropriate commercial, legal, financial, and departmental approvals. It is too early to comment further, and no final contractual decisions have yet been made. The Department’s priority is to maintain continuity of pension services and ensure that any future arrangements deliver effective, value-for-money services for Armed Forces personnel, veterans, and beneficiaries, while complying with procurement legislation.”
The Forces Pension Society says members have been receiving letters from Equiniti headed “Overpayment of Armed Forces Pension”, and lists the known issues as pension sharing orders, early departure payments, guaranteed minimum pension, National Insurance abatement and general calculation errors. It says the Secretary of State has an obligation to protect public funds and recover overpayments where possible, though amounts can sometimes be written off or repayment plans negotiated.
Neil Marshall, the society’s Chief Executive, said in August: “The overpayment recovery exercise should stop now.” The society attributes contractual and quality assurance failings to the Ministry of Defence and operational failings to the contractors, and argues they should cover the cost of their own errors.
