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UK firms are going bust owing millions in defined contribution pensions, with £32.6m left outstanding in 2024/25 alone, highlighting a growing and urgent risk to the retirement savings of everyday workers across the country.
New Freedom of Information (FOI) data obtained by our team at Liquidation Centre reveals that more than 5,100 employers collapsed with outstanding pension contributions in 2024/25, nearly three times more than during the pandemic. While schemes like the Pension Protection Fund can step in, not all losses are fully recovered, meaning workers may still see reduced retirement incomes as companies fold.
Our findings shed light on the ongoing impact business closures are having on everyday households, turning corporate failures into real-life losses for thousands of workers. This comes amid renewed debate over the future of the triple lock and increasing scrutiny over its affordability, underlining broader concerns about the resilience of retirement incomes in the UK.
Why Are Pension Contributions Going Unpaid?
The scale of the issue is rapidly worsening. The value of unpaid private pension contributions owed at the point of insolvency has surged by 359% since 2020, rising from £7.1 million to £32.6 million.
To understand the full picture, we sent a Freedom of Information request to the Pensions Regulator, assessing the impact of employer insolvencies on pensions and everyday workers since 2020. This followed record insolvencies and the high-profile collapse of major employers such as the Arcadia Group, owner of Topshop, Dorothy Perkins, Burton and Miss Selfridge, which went into administration in 2020 with a £510 million pension deficit.
Many of the businesses now entering insolvency with unpaid pension obligations are doing so as a direct consequence of financial pressures that have built up over several years. Between 2020/21 and 2021/22, there was a sharp 76.71% increase in the number of employers collapsing with outstanding pension contributions, likely driven by COVID-era borrowing schemes entering repayment from 2022, creating sustained financial strain that almost doubled insolvency figures.
How Much Has Been Lost to Employer Insolvencies Since 2020?
Our FOI request uncovered that a total of £140,507,995 in pension contributions were outstanding at the point employers entered insolvency since 2020, averaging £23 million annually.
Key figures include:
- £140.5m in defined contribution pension contributions put at risk since 2020
- £32.6m outstanding at the point of insolvency in 2024/25 – the highest figure since 2020
- £30.6m already outstanding in 2025/26, indicating sustained pressure on businesses
- 359% increase in the value of unpaid contributions between 2020/21 and 2024/25
- 178% increase in the number of employers entering insolvency with outstanding pension obligations over the same period
- 22,930 employers entered insolvency with outstanding pension contributions since 2020
2023/24 was the only financial year in this period to see a decline, with contributions falling by 7.13% from the previous year, though levels remained nearly four times higher than in 2020/21.
Looking ahead, we estimate that 2026/27 could see as much as £40.2 million in unpaid pension contributions, with an estimated 5,730 employers filing for insolvency in arrears. This would mark a forecasted 31.1% increase in value from the previous year and the highest year-on-year jump since 2022/23.
What Happens to Your Pension When an Employer Goes Bust?
When an employer enters insolvency, the insolvency practitioner works with the pension scheme to try and recover any outstanding contributions, but this does not always mean workers get back everything they are owed.
The level of protection you receive depends largely on the type of pension you have:
Defined benefit pensions are protected by the Pension Protection Fund (PPF), which generally pays 90% of the pension you were promised. However, this still means a potential 10% reduction in your expected retirement income. With Brits aged 65 to 74 holding an average pension pot of around £145,900 according to the ONS, a 10% cut could amount to a loss of approximately £14,590.
Defined contribution pensions are protected by the Financial Services Compensation Scheme (FSCS), though not all losses are guaranteed to be fully recovered.
Richard Hunt, Director at Liquidation Centre, explains:
“The biggest reduction typically happens with defined benefit pensions. While the PPF generally pays 90% of what you were promised, you may still see a 10% cut to your expected retirement income. It’s important that workers understand what type of pension they have and what protections apply to them, so they’re not caught off guard if their employer runs into difficulty.”
How Are Defined Contribution Pensions Protected?
Defined contribution pensions are protected by the Financial Services Compensation Scheme (FSCS) rather than the Pension Protection Fund, which covers defined benefit schemes. While the FSCS provides a safety net, it is important to understand that not all losses may be fully recovered in every circumstance.
When a company enters insolvency, unpaid employer and employee pension contributions are treated as a priority debt, and the insolvency practitioner will work to recover as much as possible for affected pension scheme members. However, the outcome can vary depending on the company’s financial position at the point of insolvency and how much is left to distribute among creditors.
This is why it is so important for employees to stay informed about their pension contributions and act quickly if they notice anything unusual, the sooner an issue is flagged, the better the chances of recovering what is owed.
What Should Businesses Do to Avoid Falling Behind on Contributions?
For business owners and directors, falling behind on pension contributions is not just a financial risk, it is a legal one. Employers are required by law to pay contributions on time, and the Pensions Regulator actively monitors compliance.
Richard Hunt, Director at Liquidation Centre, advises:
“Businesses under pressure should explore more sustainable ways to manage financial difficulty, such as reviewing overheads and negotiating with creditors. It’s vital that business owners monitor for signs of insolvency early. Increasing reliance on loans or credit, missed supplier payments, pressure from creditors, or warnings from HMRC are all serious red flags. Sales figures might still look reasonable on the surface, but even a gradual decline should trigger a closer look at your numbers. If you’re receiving legal letters from creditors, such as a CCJ, things have already escalated. Seeking support at the first signs of financial strain can protect your business before it’s too late.”
Early warning signs that a business may be heading toward insolvency include:
- Growing reliance on credit or loans to cover day-to-day costs
- Missing payments to suppliers or HMRC
- Receiving formal warnings, penalties or reminders from HMRC
- A gradual but sustained decline in sales or revenue
- Legal letters from creditors, including County Court Judgements (CCJs)
If your business is showing any of these signs, seeking professional insolvency advice early can make a significant difference to the outcome, both for the business and for your employees’ pension savings.
How to Check If Your Pension Contributions Are Being Paid
Employees should not wait until their employer enters insolvency to find out whether their pension contributions are up to date. There are simple steps you can take now to ensure your retirement savings are being protected.
Richard Hunt, Director at Liquidation Centre, recommends:
“We urge all UK employees to review and understand their pension type, as this can change their level of protection if things go wrong. It’s also key to regularly compare your payslips to your pension provider statements, to ensure that contributions are being paid appropriately and to get ahead of any delayed, missing or lower than expected payments. If you notice anything unusual, contact your pension provider and make a report to The Pensions Regulator, who requires employers to pay contributions on time.”
Practical steps to protect your pension:
- Know your pension type – defined benefit or defined contribution, as each has different protections
- Check your payslips against your pension provider statements regularly
- Look out for gaps or discrepancies in contribution amounts or payment dates
- Contact your pension provider immediately if anything looks unusual
- Report concerns to The Pensions Regulator – they have the power to investigate and act against non-compliant employers
These figures only relate to defined contribution schemes. 2026/27 figures are estimates forecasted by Liquidation Centre using a linear trend model applied to six years of historical data. All data is correct as of February 2026.