UK pension crisis as £32.6m in workplace retirement savings lost after businesses go bust
As companies fall into liquidation and businesses have pension payments that remained unpaid, employees are at risk of losing money.
The UK is suffering a pension crisis as £32.6m in workplace retirement savings have been lost as businesses go bust, according to new research.
As UK businesses are entering liquidation at an alarming rate, pension payments are being lost as companies owe substantial sums.
Data fromt the Liquidation Centre reveals that £32.6million in pension payments remained unpaid when employers went under during the 2024/25 financial year.
In this period, more than 5,100 companies entered insolvency at the same time as owing money to their employees' pension schemes.
Pre pandemic only 1,842 businesses collapsed with outstanding pension debts, roughly a third of the current figure.
The Pension Protection Fund is in place to ensure that impacted workers have a safety net, however this does not mean that employees will receive a full recovery of losses.
When firms enter liquidation this means that many face diminished retirement incomes.
Over recent years, the scale of this crisis has dramatically escalated with the value of outstanding contributions climbing by 359 per cent since 2020 according to GB News.
At the start of the pandemic, unpaid pension debts stood at £7.1million.
Since 2020, as businesses have folded a cumulative total of £140.5million in pension contributions has fallen into arrears, averaging at roughly £23million annually.
As firms are struggling financially, this financial year has already seen £30.6million in outstanding contributions.
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As major brands have collapsed the figures have echoed high-corporate failures.
For example, the Arcadia Group's collapse in 2020 left a £510million pension shortfall affecting workers at Topshop, Dorothy Perkins, Burton, and Miss Selfridge.
Projections indicate that the situation will only worsen, with experts anticipating roughly £40.2million in unpaid pension contributions during the 2026/27 financial year.
This would be a further 31.1 per cent increase on the previous year and the steepest annual rise since 2022/23.
It is expected that 5,730 employers are expected to enter insolvency at the same time as owing payments.
Over the past six years, 22,930 businesses have collapsed whilst still having pension obligation, with over 100,000 workers impacted.
Between 2020/21 and 2024/25 the number of employers failing with pension debts rose by 178 per cent.
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Post Covid figures showed a sharp 76.7 per cent spike occurred between 2020/21 and 2021/22, which is likely due to borrowing schemes entering repayment phases.
Director at the Liquidation Centre, Richard Hunt, warned workers to take 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 benefit schemes through the Pension Protection Fund will fall under the Financial Services Compensation Scheme.
But, even with this guarentee, members could still see a 10 per cent reduction in expected payments, as the PPF usually covers 90 per cent of benefits.
For somebody between ages 65 and 74 with an average pension amount of £145,900, this could mean losing approximately £14,590.
