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20 September 2022: CSPS & RMSPS Future Services Programme Accounting Officer assessment

Published 29 September 2022

Accounting Officer Memorandum: CSPS & RMSPS Pensions - Future Service Programme

An Accounting Officer assessment for the CSPS & RMSPS Future Services Programme was conducted in line with the Cabinet Office commitment to publish Accounting Officer Assessments for Government’s Major Projects. This Accounting Officer assessment considers the four standards of regularity, propriety, value for money and feasibility.

Background and context

The Civil Service Pension Scheme (CSPS) is the 3rd largest UK occupational pension scheme with approximately 1.6 million members and 300+ participating employers. The Royal Mail Statutory Pension Scheme (RMSPS) is the 6th largest UK occupational pension scheme, with approximately 365,000 members.

The Cabinet Office fulfils the role of Scheme Manager for both schemes on behalf of the Prime Minister and in doing so has the statutory responsibility to administer these schemes on behalf of the Prime Minister.

The bulk of the administration and delivery for both of these schemes is outsourced to specialist third party administrators who also provide the administration software.

CSPS administration is currently delivered under a contract with MyCSP and RMSPS administration is delivered through a contract with Capita. Both contracts expire in 2023, but benefit from the additional extension and termination assistance options as outlined below:

• The CSPS contract expires on 31st December 2023, with a transitional assistance period of up to 31st December 2025.
• The RMSPS contract expires on 30th September 2023, with the option of a 1 year extension and then up to a two years transitional assistance period up to 30th September 2026.

New contracts must be in place with the successful bidder(s)/provider(s) following a fair and competitive procurement process before these contractual termination periods come to an end.

Assessment against the Accounting Officer tests

Regularity

The Cabinet Office is re-tendering for both contract renewals in accordance with the Public Contract Regulations 2015.

Funding

The cost of administering the programme is funded by a levy on participating employers paid as part of the monthly employer pension contributions and does not require direct funding from the Treasury.

Legal Powers

The legal power to spend money on CSPS and RMSPS administration, and to undertake a procurement programme relating to that administration, is contained in various items of legislation and this has been clearly mapped out for this project.

Treasury Authorisation

The use of public funds needs to be proper as well as regular. Therefore, it needs to comply with the standards set out in Managing Public Money which includes obtaining the necessary internal, and if necessary external, HM Treasury approvals. The Future Services has the appropriate Ministerial oversight, Parliamentary authority and HM Treasury authorisation.

The Outline Business Case (OBC) presented opportunities to transform the current service provision in both contracts which both improved value for money and delivered a significant service improvement to stakeholders. To achieve this a Competitive Procedure with Negotiation was selected as the best delivery model for the procurement, followed by a 2 year transition for CSPS and an 18 month transition for RMSPS. The OBC was approved by the Cabinet Office Approvals Board (COAB) on 22nd Nov 21, Cabinet Office Controls 9th December 2021 and final HMT on 12 January 2022.

The procurement was formally launched on 7th February 2022 with the publication of the Contract Notice. The estimated value of these contracts (excluding VAT) is £262million for CSPS and £48million for RMSPS.

Regularity Accounting Officer Standard: Met

Propriety

Standards

The contracts have been advertised as separate Lots under one contract notice, published in accordance with the Public Contract Regulations 2015. The procurement is following the ‘Competitive Procedure with Negotiation’ process on the basis that the contracts cannot be awarded without prior negotiation because of their complexity, legal and financial makeup and associated delivery risks (particularly with regards to transition and transformation).

Controls

This programme operates within the organisational change portfolio governance and there is also additional oversight from the Civil Service Programme Board, the Royal Mail Statutory Pension Scheme Governance Group and Cabinet Office Assurance and Risk Committee (COARC).

Given the high level of senior interest, there are also regular briefings and updates to Ministers and updates have been provided to the former and current Head of the Civil Service.

Propriety Accounting Officer Standard: Met

Value for money

The renewal of the contracts for both the CSPS and the RMSPS will act as a catalyst for the change in the status quo of the current administration contract and to that end the investment objectives for the programme are to provide:

• Transformed services for members (CSPS): Service members find it easy to use and engage with so they can better understand/value their benefits and effectively plan for their retirement.
• Transformed service for employers (CSPS): A proactive service that reduces administrative burdens on the employers, improves the accuracy of data and information shared and makes it easier to interact with the administrator.
• A compliant, effective and “Right First Time” service (CSPS & RMSPS): A service that widely embraces technology and automation to mitigate risk and comply with the statutory scheme rules and regulations, case law, wider pensions legislation, the requirements of regulatory bodies such as The Pensions Regulator and industry good practice ensuring that the right people get the right money at the right time.
• Platform for continuous improvement (CSPS & RMSPS): A service that:
  • Plans and delivers genuine incremental improvements, keeping abreast of and adopts any appropriate technological advances, throughout the course of the new contract.
  • Remains relevant and fit for purpose throughout the course of the contract.
  • Provide a portable solution at the end of the contract.
• Value for Money (CSPS & RMSPS): A service that delivers a commercial model that meets the three criteria for Value for Money identified by the National Audit Office.

A full cost, risk and benefits analysis over the proposed contract terms was carried out on each of the procurement delivery options.

This analysis provided an evidence base to a) select the most appropriate procurement delivery options and b) provide the framework for the contractual terms and conditions for the procurements.

The procurements are now in flight, and are still adhering to the VFM parameters outlined at OBC stage, and there has been no indication of a material change to alter our analysis at this stage. However as the procurement progresses the Cabinet Office will have greater insight into the bidder proposals, and the extent to which we can negotiate better terms. Once a preferred bidder has been selected we can revisit the OBC assessment with actual figures and VFM commitments. This will be documented in the Full Business Case which will be subject to Cabinet Office Controls and HMT approvals.

Value for Money Accounting Officer Standard: Met

Feasibility

Governance Structure

In securing the approval to proceed at the Outline Business Case stage the programme proposed a comprehensive delivery and governance structure, which clearly aligns the programme to all senior approval bodies across Cabinet Office and Treasury.

Risk

As with all procurement programmes of this size and complexity the primary risk is of a challenge being presented against the procurement process. The programme is actively managing this through the application of all requirements stipulated by Public Contract Regulations 2015. This is enforced through active engagement from external legal professionals and overseen by Government Legal Department lawyers, all of who are engaged in the development and approval of all products relating to the discharge of these regulations.

Delivery risk falls into the three primary categories of timescales, resources and quality. To manage these the programme utilises a comprehensive risk management framework which links in to the wider Cabinet Office so that interdependencies can be identified, managed and escalated where required. Primary risks are reviewed on a weekly basis, with the wider risk profile being reviewed monthly. Given the immovability of timescales and the absolute requirement to deliver cash and non cash releasing benefits (as outlined in the OBC), resources are our primary risk as this is a critical enabler to achieving both of these. A resource profile is actively managed and risks raised where the programme is running at a resource deficit.

Assurance

As this programme is classed as a Government Major Project it is subject to Infrastructure and Projects Authority (IPA) Gate Assessments.

Since the last IPA Gate review the programme has continued to be scrutinised by various senior stakeholder bodies, as well as its own Programme Board.

Feasibility Accounting Officer Standard: Met

Conclusion

I am satisfied that the CSPS & RMSPS Future Services Programme relies on clear legal powers, meets the standards in Managing Public Money and accords with the generally understood principles of public life, representing value for money for the Exchequer as a whole, and is feasible to deliver.

This summary will be published on the government’s website (GOV.UK). Copies will be deposited in the Library of the House of Commons, and sent to the Controller and Auditor General and Treasury Officer of Accounts.

Alex Chisholm

Permanent Secretary, Cabinet Office

20 September 2022