UK pension crisis as £32.6m in retirement savings lost after businesses go bust | UK | News
Britain faces pension crisis (Image: Getty)
The UK is experiencing a pension crisis, with £32.6 million of workplace pension savings lost due to businesses going bust, according to new research.
As businesses across the UK go into liquidation at an alarming rate, pension payments are being lost as companies hold significant amounts of debt.
Data from the Liquidation Center reveals that £32.6 million of pension payments will remain unpaid due to employer collapse in the 2024/25 financial year.
More than 5,100 companies went into bankruptcy during this period, also owing money to their employees’ retirement plans.
Before the pandemic, only 1,842 businesses collapsed with unpaid pension liabilities; This means approximately one-third of the current figure.
The Pension Protection Fund exists to ensure that affected employees have a safety net, but this does not mean that employees will be fully compensated for their losses.
When firms go into liquidation this means many people will face a reduction in their retirement income.
In recent years, the magnitude of this crisis has increased dramatically, with the value of extraordinary contributions increasing by 359 percent since 2020. Great Britain News.
At the start of the pandemic, outstanding pension liabilities stood at £7.1 million.
Since 2020, an average of around £23 million in annual pension contributions have been arrears as businesses have cumulatively doubled their pension contributions totaling £140.5 million.
This financial year has already seen £30.6 million in unpaid contributions as firms struggle financially.
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The numbers reflected major corporate failures as major brands collapsed.
For example, the collapse of Arcadia Group in 2020 left a £510 million pension deficit affecting workers at Topshop, Dorothy Perkins, Burton and Miss Selfridge.
Forecasts show the situation will worsen further, with experts predicting that outstanding pension contributions during the 2026/27 financial year will be around £40.2 million.
This would be a 31.1 per cent increase on the previous year and the steepest annual increase since 2022/23.
5,730 employers are expected to enter bankruptcy at the same time with payment debts.
In the last six years, 22,930 businesses have collapsed while still owed pension obligations, affecting more than 100,000 workers.
Between 2020/21 and 2024/25, the number of employers unable to pay their pension debts increased by 178 percent.
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Post-Covid figures showed a sharp increase of 76.7 per cent between 2020/21 and 2021/22; This is likely due to borrowing plans entering repayment phases.
Liquidation Center Director Richard Hunt has warned workers to take steps to protect their pension funds.
He said: “To avoid any problems with your retirement savings, we would urge all UK workers to review and understand their pension type, as this could change their protection if things go wrong.”
Those with a benefit plan through the Pension Protection Fund will be covered by the Financial Services Compensation Scheme.
But since PPF usually covers 90 percent of benefits, even with this guarantee members may see a 10 percent drop in expected payments.
For someone aged between 65 and 74 with an average pension amount of £145,900, this could mean losing around £14,590.
