Britain is suffering through a pensions crisis, with up to £32.6million in workplace retirement savings contributions being lost due to businesses going insolvent, according to new research.
UK businesses are collapsing at an alarming rate while owing substantial sums in contributions, based on newly obtained data from the Liquidation Centre revealing the scale of the crisis.
Freedom of Information (FoI) figures secured by Liquidation Centre show that £32.6million in pension payments remained unpaid when employers went under during the 2024/25 financial year.
More than 5,100 companies entered insolvency whilst owing money to their employees’ pension schemes over this period. This represents a near tripling compared to pandemic-era figures, when 1,842 firms collapsed with outstanding pension debts.
New research suggests millions of pounds in workplace pension savings is currently lost
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Although safety nets such as the Pension Protection Fund exist to assist affected workers, full recovery of losses is not guaranteed, leaving many facing diminished retirement incomes when their employers fail.
The scale of this pension crisis has escalated dramatically over recent years, with the value of outstanding contributions climbing by 359 per cent since 2020.
During that initial pandemic year, unpaid pension debts stood at £7.1million when employers became insolvent. Since 2020, a cumulative total of £140.5million in pension contributions has fallen into arrears as businesses have folded, averaging roughly £23million annually.
The current financial year has already seen £30.6million in outstanding contributions, suggesting sustained pressure on companies across the economy.
Workplace pension pots are being forgotten | GETTY
The 2025/26 financial year already recorded £30.6 million in outstanding pension contributions | LIQUIATIONCENTRE
These figures emerge against the backdrop of high-profile corporate failures, including the Arcadia Group’s collapse in 2020, which left a £510million pension shortfall affecting workers at Topshop, Dorothy Perkins, Burton, and Miss Selfridge.
Projections suggest the situation will deteriorate further, with experts forecasting approximately £40.2million in unpaid pension contributions during the 2026/27 financial year.
This would represent a 31.1 per cent increase from the previous year and mark the steepest annual rise since 2022/23. An estimated 5,730 employers are expected to enter insolvency while owing pension payments over that period.
Since 2020, a total of 22,930 businesses have collapsed with outstanding pension obligations, potentially affecting well over 100,000 workers. The number of employers failing with pension debts rose by 178 per cent between 2020/21 and 2024/25.
Chancellor Rachel Reeves has acknowledged the economic impact of the conflict | GETTY
A sharp 76.7 per cent spike occurred between 2020/21 and 2021/22, likely driven by Covid-era borrowing schemes entering their repayment phases. Richard Hunt, the director at Liquidation Centre, urged workers to take proactive steps to safeguard their retirement funds.
He said: “To get ahead of any issues with your retirement savings, we urge all UK employees to review and understand their pension type, as this can change their protection if things do go wrong.”
Those with defined benefit schemes receive protection through the Pension Protection Fund, whilst defined contribution pensions fall under the Financial Services Compensation Scheme.
However, defined benefit members may still face a 10 per cent reduction in expected payments, as the PPF typically covers 90 per cent of promised benefits.
For someone aged 65 to 74 with an average pension pot of £145,900, this could mean losing approximately £14,590. Mr Hunt advised employees to routinely cross-reference their payslips with pension provider statements and report any discrepancies to The Pensions Regulator.