The headline is alarming. The reality is more specific - and more useful - than the coverage suggests.
A story doing the rounds this week puts a striking number on something that has been quietly growing since the pandemic.
More than £32.6 million in workplace pension contributions went unpaid in 2024/25 when employers entered insolvency, the highest figure since 2020. Over 5,100 employers went bust owing pension contributions during the same period. The research, obtained through a Freedom of Information request by the Liquidation Centre, is being reported as a pension crisis.
It isn't quite that. But it does raise a specific and genuinely useful question for anyone approaching early retirement with old pension pots still sitting at former employers.
What the figures actually show
The £32.6 million figure refers to employer contributions that were owed but never paid before the company folded. These are contributions that should have been going into employees' pension pots during their final weeks or months of employment, before the employer ran out of money to pay them.
This is a real problem for the workers affected. It is not, however, a sign that existing pension pots are evaporating. The money that was already in the pension scheme before the employer's difficulties began is held separately from the employer's assets. A pension scheme is a legal trust, not a company bank account. The employer going bust does not automatically put the accumulated pot at risk.
The distinction matters. The £32.6 million represents contributions that were never made, not contributions that were made and then lost.
The protection picture - and where it gets complicated
For defined benefit schemes - final salary pensions - the Pension Protection Fund provides a safety net. If an employer with a DB scheme becomes insolvent, the PPF steps in and pays 90% of the pension the member was promised. Not the full amount, but most of it. This is a meaningful and well-established protection.
Defined contribution schemes are different. There is no PPF equivalent for DC pots. The money in a DC scheme is invested in funds held by a pension provider, and the protection available if something goes wrong depends largely on what happened and who is involved. If the employer goes bust owing unpaid contributions, the Pensions Regulator can pursue recovery - but full recovery is not guaranteed. If the pension provider itself fails, the Financial Services Compensation Scheme covers up to £85,000.
For most people reading this site, with DC pots accumulated over long careers, the £85,000 FSCS limit is worth knowing. It applies per provider, not per pot. Which means a pot of £200,000 sitting with a single provider has £115,000 above the protection threshold. Spreading large DC pots across more than one provider is one response to this, though the practical complexity of doing so is real.
What this means if you've recently left employment
If you resigned recently and your DC pension pot is sitting in your former employer's workplace scheme, your immediate exposure to the employer insolvency risk is low. The contributions you made during employment are already in the pot and held in trust separately from the employer's assets.
The more relevant question the story raises is a different one. Is the workplace scheme at a former employer the right long-term home for a pot you're now planning to draw from in retirement? The scheme was chosen by your employer, administered for an active workforce and probably not optimised for the draw-down phase you're approaching.
That's the consolidation question. And it's worth looking at properly rather than as a panic response to a headline.
A note on the source
The Liquidation Centre, which filed the Freedom of Information request that produced these figures, is an insolvency services business. The research is genuine and the figures come from the Pensions Regulator. But the framing - "pension crisis," projected deterioration to £40 million next year - is doing commercial work as well as informational work. Insolvency services firms benefit from coverage that raises awareness of business failure risks.
That doesn't make the data wrong. It's worth holding the context alongside the numbers.
The practical upshot
If you're still working, check that your employer is actually paying pension contributions on time. You can do this through your pension provider's online portal - most providers show contribution history. The Pensions Regulator's website has guidance on what to do if contributions appear to be missing.
If you've recently left employment, locate all your old DC pots and consider whether consolidation makes sense. Not urgently, not as a response to this story, but as part of the broader draw-down planning that approaching retirement requires.
The full consolidation question - when it makes sense, when it doesn't, and the specific checks worth doing before transferring anything - is covered in the companion post to this one in Retirement Basics.
And the free pension tracing service at MoneyHelper will help you find any pots you've lost track of. If you've changed employers several times over a long career, there may be more sitting in old schemes than you realise.
Tony writes about his personal journey to early retirement at freebefore65.co.uk. He is not a financial adviser. All content reflects his own experience and research and should be taken as a starting point for your own thinking, not as professional advice.
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