Thousands of UK workers are facing losses to their retirement savings after companies collapsed with unpaid pension contributions still outstanding. New figures show the scale of the issue has increased sharply since the pandemic, affecting more than 100,000 employees across the country.
According to research from the Liquidation Centre, £32.6 million in workplace pension payments remained unpaid during the 2024/25 financial year when employers entered insolvency. The findings come as concerns continue to grow around the financial stability of businesses and the protection available to workers’ retirement funds.
The data highlights a steep rise in the number of employers failing while still owing money into pension schemes. More than 5,100 companies entered liquidation during the same period while carrying pension debts, compared with 1,842 businesses before the pandemic.
While the Pension Protection Fund (PPF) exists to provide a financial safety net for workers affected by company failures, employees may still experience reduced retirement incomes because the system does not always guarantee full compensation.
Unpaid Pension Contributions Have Surged Since 2020
According to the Liquidation Centre, unpaid workplace pension debts have increased by 359 percent since 2020. At the beginning of the pandemic, pension arrears stood at £7.1 million. Since then, the cumulative value of unpaid contributions linked to collapsed businesses has reached £140.5 million.
The figures reflect a broader increase in corporate insolvencies across the UK economy. Between 2020/21 and 2024/25, the number of employers failing while owing pension contributions rose by 178 percent. Over the same six-year period, 22,930 businesses entered insolvency with outstanding pension obligations.
The report also found that more than 100,000 workers have been impacted by these collapses. In 2021/22 alone, post-pandemic figures showed a 76.7 percent increase in businesses entering insolvency while carrying pension debt. According to the report, this spike was likely linked to borrowing schemes reaching repayment phases after pandemic-era financial support measures ended.
Some of the largest pension shortfalls have been associated with major corporate failures. The collapse of the Arcadia Group in 2020 left a £510 million pension deficit affecting employees linked to brands including Topshop, Dorothy Perkins, Burton, and Miss Selfridge.
Workers Warned to Review Pension Protections
The Pension Protection Fund provides support for members of defined benefit pension schemes when employers become insolvent. Yet the protection offered may not fully restore lost retirement income.
According to the report, workers covered by the PPF can still face reductions in expected payments because the fund generally covers 90 percent of benefits rather than the full amount. For someone aged between 65 and 74 with an average pension worth £145,900, this could translate into a reduction of roughly £14,590.
Richard Hunt, director at the Liquidation Centre, urged employees to better understand the type of pension scheme they belong to and the protections attached to it. “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,” Hunt said.
The research also indicates that the situation may continue in the near term. Current figures for this financial year already show £30.6 million in unpaid pension contributions linked to struggling firms entering insolvency.
