Bereaved families could face 'unjust' tax bill after civil service pension delays
BBC Homepage
Skip to content
Accessibility Help
Your account
Home
News
Sport
Earth
Reel
Worklife
Travel
Culture
Future
Music
TV
Weather
Sounds
More
menu
Search BBC
Bereaved families affected by severe delays paying out civil service pensions could face an "unjust" tax bill, the government has been warned.
Under HMRC rules, certain lump sum pension payments must be paid within two years of the pension scheme being notified of a death to remain tax-free.
Conservative MP Sir Geoffrey Clifton-Brown, who chairs Parliament's Public Accounts Committee, said it was "unconscionable" some families could face a "death tax" through no fault of their own.
The Cabinet Office said that if delays caused a tax charge there were existing avenues to claim compensation, such as the Pensions Ombudsman. However, the ombudsman is currently advising that standard complaints are only likely to be resolved within 18 months, with more complex cases facing a longer wait.
The Civil Service Pension scheme manages the pensions of 1.7 million public sector workers in the UK. Outsourcing firm Capita took over the administration of the scheme from a company called MyCSP in December 2025, saying it inherited a backlog of more than 86,000 cases. Despite a two-year transition period, problems have persisted.
According to the latest figures, 1,643 outstanding cases of bereavement or death in service are more than 100 days old, with only 301 in scope to be paid within 15 days.
The PCS union, representing civil servants, said there were "serious questions" over how long these cases would remain unresolved.
Sir Geoffrey has written to Cabinet Office Minister Louise Haigh to urge the government to confirm bereaved families affected will not face this "unjust financial penalty".