Millions of pounds in workplace pension contributions are going unpaid as UK companies collapse, raising fresh concerns over the security of retirement savings.
More than £32.6 million in defined contribution pensions was left outstanding when firms entered insolvency in the 2024 to 2025 financial year, the highest level recorded since 2020.
Over 5,100 employers went bust owing pension contributions during the same period, nearly three times the number seen during the pandemic, pointing to mounting financial strain across UK businesses.
The data, obtained through a Freedom of Information request to The Pensions Regulator by insolvency service the Liquidation Centre, shows a steep rise in both the number of insolvencies involving pension arrears and the value of unpaid contributions.
Unpaid contributions surge as insolvencies rise
Since 2020, a total of £140.5 million in pension contributions has been left unpaid when employers entered insolvency, averaging around £23 million each year.
The scale of the issue has grown rapidly. Between 2020 to 2021 and 2024 to 2025, the value of unpaid contributions rose by more than 359 percent, climbing from £7.1 million to £32.6 million.
Over the same period, the number of employers entering insolvency with outstanding pension obligations increased by 178 percent, from 1,842 to 5,121.
The figures suggest that tens of thousands of workers may have been affected, with retirement savings disrupted as companies fold.
Retirement risks grow despite protections
While safeguards such as the Pension Protection Fund exist, they do not always fully cover losses in defined contribution schemes, meaning employees can still face reduced retirement incomes.
The issue has gained wider attention amid ongoing debate over the sustainability of the state pension triple lock, adding to concerns about how future retirement income will be secured.
Rising business failures have also been linked to post pandemic pressures, including debt repayments from government backed loans and higher operating costs. The outlook suggests the problem may worsen. Unpaid pension contributions are estimated to reach £40.2 million in the current financial year, based on projected trends.
This would mark another significant increase and the highest level on record, with around 5,700 employers expected to enter insolvency while owing pension contributions. Data for the current year already shows £30.6 million in unpaid contributions, indicating that pressures on businesses remain elevated.
Warning signs for employers
Richard Hunt, director at Liquidation Centre, said businesses need to take early action when financial pressures emerge, warning that missed payments can quickly escalate into more serious problems. “Businesses under pressure should look at more sustainable ways to manage financial difficulty, such as reviewing overheads and negotiating with creditors.”
He said warning signs are often visible before insolvency occurs.
“It is also vital that business owners monitor for signs of insolvency early; a business that’s becoming increasingly reliant on loans or credit to stay afloat should see that as a serious sign that something needs to change.
“Missing payments to suppliers or experiencing pressure from creditors is another major concern. Sales figures might still look reasonable on the surface, but even a gradual decline should trigger a closer look at your figures.”
He said early intervention could help businesses avoid collapse. “Seeking support during the early signs of financial strain can protect businesses before it’s too late.”
The data reflects a broader challenge for employers and policymakers, as rising insolvencies translate into direct financial losses for workers.
William Furney is a Managing Editor at Black and White Trading Ltd based in Kingston upon Hull, UK. He is a prolific author and contributor at Workplace Wellbeing Professional, with over 127 published posts covering HR, employee engagement, and workplace wellbeing topics. His writing focuses on contemporary employment issues including pension schemes, employee health, financial struggles affecting workers, and broader workplace trends.
- William Furney
- William Furney
- William Furney
- William Furney
