Retired civil servants have been failed by the decision to outsource their pension scheme, the government has admitted, and the maladministration meant some were left waiting up to a year for payments. Multiple members of the civil service pension scheme, run by the private company Capita since December, have come forward to say they are unable to afford rent and have been forced to use food banks after being left without an income. An estimated 17,000 relatives of deceased claimants are also facing financial hardship as chaos at the scheme leads to delays in payments to them.

The Cabinet Office has confirmed it is looking to take the scheme back in-house following “unacceptable” service levels. The Guardian first flagged concerns in December last year and MPs have repeatedly warned that Capita, which was already facing a backlog of cases when it took on the scheme from another private company, was ill-equipped for the scale of the task. The Guardian can reveal that among those struggling to get their money are a 98-year-old, who may require a bailout from her sons, and a young widow forced to claim universal credit to support herself and her daughter.

The 98-year-old, who does not wish to be named, applied to the scheme when her husband, a retired civil servant, died last December. “It took three months just to establish what application forms CSPS [the civil service pension scheme] required and get the information to them in a form they would accept,” said her son, Nick Hitch. “My mother has very few savings left and if CSPS continue to delay, my brother and I will have to support her financially within weeks.

It is causing her a lot of worry, and stress is dangerous when you are 98.” After the Guardian contacted Capita the claimant began to receive her payments, along with a lump sum for arrears. Sarah Colhill has been forced to claim universal credit because of delays in processing the £86,000 lump sum death-in-service benefit due to her after her 57-year-old husband died last October. She is the sole carer for her disabled daughter and is living off her late husband’s pension of £110 a month.

“Nine months on, Capita now say they won’t release the money without a letter of administration, despite the fact they are already paying me my husband’s pension and had told me in February that they had all the paperwork they needed,” she said. “As a direct result of these delays, I have been left in significant financial hardship and can no longer afford my rent.” Capita was awarded the £239m contract by the Cabinet Office, despite having been stripped of its contracts to run Teachers’ Pensions and the Royal Mail statutory pension scheme because of delays and backlogs. A report by parliament’s public accounts committee had advised that the government should bring the scheme back in-house since Capita had missed key milestones during the two-year handover.

It also accused the government of failing to intervene when service standards plummeted under the previous administrator, Equiniti. The government said Capita had spent the transition period improving its technology and staffing levels and pressed ahead with the contract.