Capita Digital Pension Solutions is set to launch in 2025
Capita has reported a 5% rise in revenue in its pension solutions division – seeing turnover rise from £170.3m to £179.0m during 2024.
The outsourcing firm's full year results – published today (5 March) – said its pension administration and consulting business secured contracts with a value of £144.9m in the year to 31 December 2024 – down 55.8% from 2023, which reflected a material Civil Service Pension Scheme win in 2023.
In 2024, Capita said it saw contract success with the renewal of the Royal Mail Pension Scheme with a total contract value of £53m – adding the total unweighted pipeline for its pension solutions business was £689m at the end of 2024, an increase from £231m in 2023 and something Capita said "reflecting its focus on pipeline replenishment and increased tender opportunities".
It said the division's order book as at 31 December 2024 was £441.3m, a small decrease from £461.8m at the end of 2023, reflecting the revenue recognised in 2024 which was not offset by wins in 2024.
Capita said that, in 2025, it expected to see "mid-single digit revenue growth" across its pension solutions business, driven by growth with existing clients. It added it expected the margin for the division to be stable.
Pensions Solutions Financial Performance
Source: Capita. Notes (1): Adjusted revenue increased 5.1% to £179.0m, reflecting volume increases across a number of clients including the Pension Insurance Corporation (PIC) contract and the benefit from indexation. Adjusted operating profit increased by 8.5% to £28.1m reflecting revenue growth and benefit from the cost reduction programme. The division delivered an adjusted operating margin of 15.7% (2023: 15.2%). Operating cashflow excluding business exits increased by 52.1% to £33.3m, driven by improved billing cycles.
Strategy and better technology
In its results, Capita said a key pensions industry trend was increased member demand for a "seamless user experience" – with tailored offerings from increased automation and self-service options around customer needs for a 24/7 service offering. It said its pension solutions business was "well positioned" to benefit from this.
Capita said its pension solutions business has a roadmap to further improve and digitise operations – and was set to launch Capita Digital Pension Solutions later in 2025.
This tool – which utilises Capita Pension's existing infrastructure alongside Microsoft Dynamics – uses data to provide a hyper-personalised member experience.
Capita said it was also piloting a number of AI-based solutions to provide efficiencies and speed up member experience.
The firm said: "This is a step change in our service offering and will help the division to expand into adjacent segments."
Operational performance
Capita said the key performance metrics for its pension solutions business was 94% in 2024, up from 86% in 2023 – noting it had seen further improvements in the division's customer net promoter score (cNPS) with a 25 point improvement to -3 points.
It said that, during the year, the business completing 4.5 million transactions for members, as well as 39 scheme implementations onto its Hartlink digital platform and infrastructure.
Capita said it saw the number of members engaging with pensions via digital channels increase by more than 200% in 2024 – noting that, in 2025 it would be transitioning all clients to paperless communications which it expected would allow for more efficient communication, while reducing its costs to deliver.
Horizon Pension Scheme
Capita also reported on the latest formal valuation for the group's main defined benefit (DB) pension scheme – the c.£1bn Horizon Pension Scheme (HPS), the plan formerly known as the Capita Pension and Life Assurance Scheme – was carried out as at 31 March 2023.
It said this identified a statutory funding surplus of £51.4m. Given the funding position, Capita and the HPS trustees agreed that no further deficit contributions from the group would be required other than those already committed as part of the 2020 valuation.
Capita said that, as at 31 December 2024, the net surplus of the HPS was approximately £80.0m on a technical provisions basis. It said the net DB pension position of all reported DB schemes for accounting purposes increased from a surplus of £26.8m at 31 December 2023 to a surplus of £37.9m at 31 December 2024.
