More than £140m linked to employer insolvency pensions has gone unpaid since 2020, according to new figures highlighting the growing financial strain facing UK businesses. Rising insolvency levels are leaving thousands of employees at risk of missing pension contributions, with experts warning the issue could continue to worsen over the coming years.
Recent data obtained through a Freedom of Information request to The Pensions Regulator revealed that unpaid pension contributions linked to insolvent employers reached £32.6m during the 2024/25 financial year alone — the highest annual figure recorded since the pandemic.
The number of employers entering insolvency while owing pension contributions has also risen sharply. In 2020/21, 1,842 employers collapsed with pension arrears. By 2024/25, that figure had increased to 5,121 businesses.
Over £140m in Pension Contributions Lost to Employer Insolvencies Since 2020
Economic pressures including rising borrowing costs, inflation, pandemic-era debt repayments and ongoing cash flow challenges continue to place strain on UK companies across multiple sectors.
As businesses struggle to manage overheads and liabilities, pension contributions are increasingly becoming part of wider insolvency issues. Forecasts suggest unpaid pension contributions could exceed £40m during the 2026/27 financial year if current trends continue.
Since 2020, almost 23,000 employers have reportedly entered insolvency while owing pension contributions, potentially affecting tens of thousands of employees across the UK.
What Happens to Employer Insolvency Pensions During Insolvency?
For employees, the impact of employer insolvency can depend on the type of pension scheme involved.
Defined contribution (DC) pensions are typically held separately from the employer’s assets, meaning pension pots themselves are generally protected. However, unpaid employer contributions may still be lost or delayed if they were not transferred before insolvency proceedings began.
Defined benefit (DB) pension schemes may receive support through the Pension Protection Fund (PPF), which acts as a safety net when employers fail and schemes cannot meet their obligations.
The growing issue of employer insolvency pensions is becoming a major concern for regulators, employees and insolvency practitioners as business failures continue to increase.
How Directors Can Reduce Employer Insolvency Pensions Risks
The figures underline the importance of businesses seeking professional advice at an early stage when facing financial difficulties.
Warning signs such as persistent cash flow problems, reliance on short-term borrowing, creditor pressure and missed financial obligations can indicate deeper solvency concerns. Acting early may help directors explore restructuring options, improve financial stability and avoid further risks to employees and creditors.
For employees, regularly reviewing pension statements and checking that contributions are being paid correctly can also help identify potential issues sooner.
For directors, understanding the risks surrounding employer insolvency pensions can help encourage earlier financial intervention and better protection for employees.
Contact Us
If your company is struggling with cash flow, creditor pressure or mounting financial obligations, seeking professional advice early can help protect both the business and its employees. At DCA Business Recovery, our experienced team provides confidential guidance on restructuring and insolvency options tailored to your circumstances.
Learn more about Creditors Voluntary Liquidation or contact DCA Business Recovery today for expert support.
