{"id":637619,"date":"2026-10-22T03:52:23","date_gmt":"2026-10-22T03:52:23","guid":{"rendered":"https:\/\/www.newsbeep.com\/nz\/637619\/"},"modified":"2026-10-22T03:52:23","modified_gmt":"2026-10-22T03:52:23","slug":"bereaved-civil-service-families-could-face-unjust-tax-bills-due-to-pension-scheme-delays-civil-service","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/nz\/637619\/","title":{"rendered":"Bereaved civil service families could face \u2018unjust\u2019 tax bills due to pension scheme delays | Civil service"},"content":{"rendered":"<p class=\"dcr-1s160rg\">Bereaved families could face \u201cunconscionable\u201d tax bills because of \u201cchaos\u201d in the civil service pension scheme, the government has been warned.<\/p>\n<p class=\"dcr-1s160rg\">Some lump sum pension payments to families are only tax-free if made within two years of a scheme being told of the member\u2019s death.<\/p>\n<p class=\"dcr-1s160rg\">MPs are now voicing fears that severe delays in the administration of the civil service pension scheme, which is run by the outsourcing company <a href=\"https:\/\/www.theguardian.com\/business\/capitagroup\" data-link-name=\"in body link\" data-component=\"auto-linked-tag\" rel=\"nofollow noopener\" target=\"_blank\">Capita<\/a>, could push some families over that threshold. They would then be hit with a tax bill calculated at the recipient\u2019s personal rate.<\/p>\n<p class=\"dcr-1s160rg\">The families of more than 1,600 deceased civil servants have been waiting for more than 100 days for their \u201cdeath in benefit\u201d claim to be processed, <a href=\"https:\/\/www.gov.uk\/government\/publications\/civil-service-pension-recovery-plan-updates\/civil-service-pension-recovery-plan-update-5-october-2026\" data-link-name=\"in body link\" rel=\"nofollow noopener\" target=\"_blank\">according to the latest figures<\/a>. Some of those have reported struggling to pay bills because of the delay.<\/p>\n<p class=\"dcr-1s160rg\">The Conservative MP Geoffrey Clifton-Brown, who chairs the Commons public accounts committee (PAC), said: \u201cThe chaos currently engulfing the civil service pensions scheme means that the likelihood of death benefit payments being made within two years is slim.\u201d<\/p>\n<p class=\"dcr-1s160rg\">He added: \u201cIt 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.\u201d<\/p>\n<p class=\"dcr-1s160rg\">The Cabinet Office, which is responsible for the pension scheme, said it was unable to prevent HM Revenue and Customs from taxing delayed claims, and that affected members would have to claw back the money by taking their case to the <a href=\"https:\/\/www.theguardian.com\/money\/pensions\" data-link-name=\"in body link\" data-component=\"auto-linked-tag\" rel=\"nofollow noopener\" target=\"_blank\">Pensions<\/a> Ombudsman.<\/p>\n<p class=\"dcr-1s160rg\">The ombudsman estimates an 18-month wait to resolve cases because of the volume of complaints from those affected.<\/p>\n<p class=\"dcr-1s160rg\">The PAC has called for a change in legislation to prevent relatives paying the price for administrative delays.<\/p>\n<p class=\"dcr-1s160rg\">The government has already been accused of letting down civil servants and their families by repeatedly outsourcing the 1.7-million-member pension scheme to private companies that failed to deliver.<\/p>\n<p class=\"dcr-1s160rg\">The PAC last year urged ministers to take the scheme in-house after a previous contractor, MyCSP, was blamed for plummeting service levels. However, the \u00a3239m contract passed to Capita last December, despite <a href=\"https:\/\/committees.parliament.uk\/committee\/127\/public-accounts-committee\/news\/209816\/civil-service-pensions-report-lays-out-successive-govt-failures-in-scheme-administration\/\" data-link-name=\"in body link\" rel=\"nofollow noopener\" target=\"_blank\">concerns voiced by some<\/a> that the company was inadequately prepared.<\/p>\n<p class=\"dcr-1s160rg\">The Cabinet Office said it was confident that Capita would offer an improved service. It has since acknowledged that service levels were \u201cunacceptable\u201d. MyCSP and Capita were contacted for a comment.<\/p>\n<p class=\"dcr-1s160rg\">In February, a dedicated email address was set up for unions to escalate cases of severe hardship caused by the delays. The cases referred included claimants at risk of suicide or of losing their homes.<\/p>\n<p><a data-ignore=\"global-link-styling\" href=\"#EmailSignup-skip-link-13\" class=\"dcr-76akua\">skip past newsletter promotion<\/a>Free newsletter |Every weekday<\/p>\n<p class=\"dcr-vf9hps\">Sign up to Business Today<\/p>\n<p class=\"dcr-djbwnz\">Get set for the working day \u2013 we&#8217;ll point you to all the business news and analysis you need every morning<\/p>\n<p><img src=\"https:\/\/www.newsbeep.com\/nz\/wp-content\/uploads\/2026\/10\/1792641143_587_500.jpg\" alt=\"\" loading=\"lazy\" decoding=\"async\" class=\"dcr-gx9601\"\/><\/p>\n<p id=\"EmailSignup-skip-link-13\" tabindex=\"0\" aria-label=\"after newsletter promotion\" role=\"note\" class=\"dcr-76akua\">after newsletter promotion<\/p>\n<p class=\"dcr-1s160rg\">Clare Norris has been waiting 11 months for the death benefit and pension payments she is due after her husband died last November.<\/p>\n<p class=\"dcr-1s160rg\">\u201cI was petrified \u2013 I am 52 and early death was not part of our financial plan,\u201d she said. \u201cLosing your partner is one of the most difficult experiences anyone can go through. The lack of clarity, communication and basic administrative handling from Civil Service Pensions has made it considerably worse.\u201d<\/p>\n<p class=\"dcr-1s160rg\">Capita said her case would be progressed under a new process. \u201cIt remains a high priority and the member can expect to hear on next steps as soon as possible.\u201d<\/p>\n<p class=\"dcr-1s160rg\">Under HMRC rules, in cases in which someone dies under the age of 75, tax-free lump sum payments must be made within two years, otherwise they will be taxed at the recipient\u2019s marginal rate of tax.<\/p>\n<p class=\"dcr-1s160rg\">The Cabinet Office said it was committed to ensuring scheme members were not left out of pocket. \u201cWe are continuing to hold Capita to account, including holding back nearly \u00a310m in payments, and are doing everything in our power to ensure individuals do not experience delays,\u201d said a spokesperson.<\/p>\n<p class=\"dcr-1s160rg\">\u201cIf delays cause a tax charge, existing avenues for complaints can provide financial redress or compensation to cover losses.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"Bereaved families could face \u201cunconscionable\u201d tax bills because of \u201cchaos\u201d in the civil service pension scheme, the government&hellip;\n","protected":false},"author":2,"featured_media":637620,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[138,246,111,139,69,244,245],"class_list":["post-637619","post","type-post","status-publish","format-standard","has-post-thumbnail","category-personal-finance","tag-business","tag-finance","tag-new-zealand","tag-newzealand","tag-nz","tag-personal-finance","tag-personalfinance"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/637619","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=637619"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/637619\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/637620"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=637619"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=637619"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=637619"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}