The government has terminated the contract for the Royal Mail Statutory Pension Scheme with Capita after the outsourcing firm “failed to deliver numerous milestones”, Cabinet Office minister, Nick Thomas-Symonds, has confirmed.

Speaking in the House of Commons, Thomas-Symonds said the decision followed repeated concerns over delays and a lack of confidence in Capita’s ability to deliver the new operating model.

He stated: “Following a failure to meet critical transition milestones and a lack of confidence in Capita’s ability to implement and transition to the new operating model in a timely fashion, I’m announcing today to the House that I have terminated the new Royal Mail statutory pension scheme contract with Capita.

“Capita had an 18-month planning window to prepare for the transition. They failed to deliver numerous milestones, including a failure to implement the required IT automation.

“The Cabinet Office repeatedly flagged delays in transition milestones.”

Thomas-Symonds emphasised that the government would act “decisively” to protect pension members, adding that the “security and dignity” of public servants must be underpinned by “rigorous accountability”.

He also sought to reassure Royal Mail pensioners, stating that the government would “do all we can to ensure continuity of service”.

The decision comes amid broader scrutiny of Capita’s pension administration services, particularly regarding the Civil Service Pension Scheme (CSPS).

Thomas-Symonds said assurances given by Capita leadership regarding the CSPS transition had not been met, describing the financial impact on members as “unacceptable”.

He revealed that Capita currently has a backlog of 24,000 outstanding pension quotations and 1,500 unresolved complaints raised by MPs.

“It is clear… that the delivery of the service to civil servants since the transfer on 1 December last year has fallen far short of the required standard,” he said.

He added that cases of members missing mortgage payments and experiencing financial hardship were “distressing and entirely unacceptable”.

The government has provided £7.2m in interest-free transitional support loans to more than 1,300 affected members.

Thomas-Symonds also highlighted a data breach affecting CSPS members in late March, describing it as a “fundamental failure in data protection”.

The Information Commissioner’s Office has been notified, and the Cabinet Office has requested a full account from Capita.

In addition, the government is withholding milestone payments when contractual targets are not met.

“The Cabinet Office has mandated a clear recovery target,” he noted.

“Capita must clear all inherited arrears by the end of this month and restore service levels to standard, contractually required levels by the end of June this year.”

Responding to the announcement, PCS general secretary, Fran Heathcote, called for similar action to be taken on the CSPS.

“The decision to terminate Capita’s role in the Royal Mail Pension Scheme sends a clear message, which is this can be done,” she stated.

“When a contractor fails, contracts can and should be ended. The same must apply to the civil service pension scheme.

“It is simply unacceptable that this is allowed to continue when a clear alternative exists in bringing civil service pensions back in-house.

"The government must now act with urgency, end Capita’s contract, and prevent further failure.”

A spokesperson for Capita said: “Capita has administered the Royal Mail Statutory Pension Scheme since 2018, and we will continue to support its 337,000 members during the transition period, working closely with the Cabinet Office to ensure continuity of service for members.”

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