Sopra Steria’s MoD pension contract probed for possible breaches
- Investigations are examining whether Armed Forces pension contract obligations were breached.
- Sopra Steria holds the MoD pension administration contract; Equiniti Paymaster subcontracts.
- The current Sopra Steria contract began in May 2020 and expires in May 2029.
- No final contractual decisions have been made, Lord Coaker said.
LONDON, UNITED KINGDOM — Investigations are examining whether contractual obligations were breached in the outsourced administration of Armed Forces pensions for the United Kingdom’s Ministry of Defence (MoD), after a run of pension calculation errors. Sopra Steria holds the contract, and Equiniti Paymaster delivers pension payment services as its subcontractor.
The department will consider any contractual remedies in light of the investigations’ findings.
A prime contract under review
Lord Coaker, minister of state at the MoD, set out the position in an answer given in Parliament, UK Defence Journal reported on Nov. 7. Conservative peer Lord Bourne of Aberystwyth had asked about the contracts with Equiniti Paymaster and Sopra Steria, and whether they would be renewed.
Coaker said Equiniti has no direct contractual relationship with the MoD. The Sopra Steria contract uses the Model Services Contract, a Cabinet Office template for complex contracts with provisions for business process outsourcing and information technology (IT) delivery services.
“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,” Coaker said.
Contract runs to May 2029
Some cases predate the current Sopra Steria contract, which began in May 2020, Coaker said. It expires in May 2029, and the MoD is considering future delivery arrangements for Armed Forces pension services.
The Armed Forces and Veterans Future Shared Services Programme is developing an Outline Business Case for pension administration and its technology, appraising all options.
“It is too early to comment further, and no final contractual decisions have yet been made,” Coaker said.
Overpayment letters reach members
The Forces Pension Society says members have been receiving letters from Equiniti headed “Overpayment of Armed Forces Pension.” The known issues it lists include pension sharing orders, guaranteed minimum pension and general calculation errors.
The society attributes contractual and quality assurance failings to the MoD and operational failings to the contractors, and argues they should cover the cost of their own errors. “The overpayment recovery exercise should stop now,” Neil Marshall, the society’s chief executive, said in August.
What it means for buyers
Under a prime contract, the MoD’s contractual lever runs through Sopra Steria, because the payment subcontractor has no direct contract with the department. The options appraisal ahead of the 2029 expiry will shape how the service is bought next.
Public bodies weighing government outsourcing can study how a service level agreement (SLA) assigns errors, and compare providers on OA’s list of the top 20 BPO companies in the UK.
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