Bereaved families could face 'unjust' tax bill after civil service pension delays
Summary
Families of deceased UK civil servants are facing delays in receiving pension payments, which may lead to unexpected tax charges. The government and pension administrators say there are ways to seek compensation, but long delays are causing financial and emotional stress.Key Facts
- UK civil service pensions are managed for 1.7 million workers.
- Administration was handed to firm Capita in December 2025, inheriting over 86,000 unpaid cases.
- By February, the backlog had grown to 120,000 cases with many payments delayed for months.
- HMRC rules say lump sum pension death payments must be made within two years of the pension scheme learning of the death to avoid tax.
- Some families risk paying taxes on these pensions if delays continue.
- The Pensions Ombudsman handles complaints but usually takes 18 months or more to resolve cases.
- A Conservative MP warned government ministers that these delays create unfair financial burdens for grieving families.
- One case cited involved a man waiting nearly two years for his late brother’s pension payout, which may become taxable soon.
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