Capita Deploys Microsoft Copilot to Tackle UK Civil Service Pensions Backlog

Capita, the British business process outsourcing giant, has unveiled a major technological intervention to address a critical backlog in the administration of the UK Civil Service Pensions Scheme (CSPS). According to internal communications and public disclosures, the company is deploying Microsoft Copilot — an AI-powered assistant integrated into Microsoft 365 — to automate document review, case prioritization, and eligibility verification for tens of thousands of unresolved pension claims. The move comes amid mounting pressure from Parliament and civil servants who have faced delays of over 18 months in receiving pension entitlements following the transfer of CSPS administration from the government to Capita in 2024.

The CSPS, which covers over 1.2 million current and former civil servants, was transferred to Capita under a £1.2 billion contract aimed at modernizing outdated systems. However, the transition exposed systemic inefficiencies, including fragmented digital records, manual data entry bottlenecks, and a shortage of trained personnel. As of early 2026, over 45,000 cases remained unprocessed, triggering parliamentary inquiries and media scrutiny. In response, Capita’s technology team collaborated with Microsoft to pilot Copilot across its pensions division, using natural language processing to extract key data from scanned documents, cross-reference pension rules, and flag anomalies for human review.

According to Capita’s internal case studies, Copilot has reduced average case processing time by 62% in pilot units, cutting the time to verify a claim from 14 days to under five. The AI tool also identifies duplicate submissions and missing documentation with 91% accuracy, significantly reducing administrative errors. Capita’s pensions division, which handles over 120,000 annual transactions, now deploys Copilot across 80% of its frontline teams, with plans to expand to all UK-based pension administrators by Q3 2026.

While the initiative has been welcomed by pensioners’ advocacy groups, concerns remain over transparency and accountability. Critics argue that relying on proprietary AI systems without public audit trails could obscure decision-making processes, particularly when claims are denied. The UK Public Accounts Committee has requested a full audit of Copilot’s algorithmic logic and data sources, emphasizing the need for explainable AI in public services.

Capita maintains that human oversight remains central. Each AI-generated recommendation requires validation by a trained pensions advisor, and all decisions are logged for compliance. "This isn’t about replacing staff — it’s about empowering them," said Sarah Lin, Head of Digital Transformation at Capita. "Copilot handles the repetitive, time-consuming tasks, freeing our experts to focus on complex cases and direct engagement with pensioners."

The deployment also aligns with broader government initiatives to digitize public services under the Digital Identity and Attributes Trust Framework. Microsoft, which has partnered with Capita on multiple public sector contracts, confirmed that Copilot’s deployment for pensions is one of its largest public sector AI implementations in Europe to date.

As the UK grapples with an aging population and increasing pension liabilities, Capita’s experiment may serve as a blueprint for other public agencies facing similar administrative crises. Whether this AI-driven approach can restore public trust and deliver timely justice to pensioners remains to be seen — but for now, it represents one of the most ambitious applications of generative AI in British public administration.