Royal Mail future access to private capital
To help protect the future of the universal postal service we gave Royal Mail access to private sector capital and associated commercial disciplines through a sale of shares in October 2013. Royal Mail is the only postal operator in the UK that is able to provide the universal postal service. A healthy sustainable Royal Mail will ensure the maintenance of the universal postal service.
The Secretary of State laid a report ‘Royal Mail: Sale of Shares’ in Parliament on 10 July 2013 setting out the government’s decision to float shares on the London Stock Exchange (LSE) via an Initial Public Offering an IPO.
On 12 September 2013, the government further announced its intention to float Royal Mail on the premium segment of the official list and the main market of the London Stock Exchange (LSE). On 27 September 2013, the Initial Public Offering (IPO) was launched, giving financial institutions and members of the public (either through direct application to government or through intermediaries) the opportunity to buy shares. The offer closed on 8 October and conditional trading on the LSE took place on the 15 October. Royal Mail entered the FTSE 100 group of companies in December 2013.
As part of the IPO, around 150,000 eligible Royal Mail employees were given a 10% stake in the company for free. This was the largest employee share scheme of any major privatisation for nearly 30 years.
There were some myths about what would happen as a result of the sale of shares in Royal Mail. The facts are set out in Royal Mail: mythbusters.
Objectives for the sale of Royal Mail shares
To sustain the universal postal service for the benefit of all users by securing Royal Mail’s future through the introduction of private sector capital and associated commercial disciplines.
We will achieve this through:
- delivering a sale of shares in Royal Mail within this Parliament
- creating an employee share scheme that, as Parliament has decided, will lead to at least 10% of the company in employee ownership, to drive stronger staff engagement
- delivering a financial outcome for the taxpayer, which when considered in the context of the overarching policy objective, represents overall value for money
Royal Mail Pension Plan
The Postal Services Act 2011 enabled the government to take on the historic deficit in the Royal Mail Pension Plan (RMPP). The pension deficit was a heavy burden on Royal Mail, taking up cash needed to modernise and become more efficient.
On 1 April 2012 we transferred the historic liabilities of the RMPP into a new government scheme, the Royal Mail Statutory Pension Scheme (RMSPS). This covers only the historic deficit, and not any new pension benefits, rights and obligations that accrue for members under the continuing RMPP.
These measures apply to all members of the RMPP, whether or not they are already drawing their pension and regardless of whether they work for Royal Mail or the Post Office. Future pension accruals remain the responsibility of Royal Mail, the Post Office and the RMPP Trustee.