THOUSANDS of savers could be at risk of losing out on retirement cash due to a big pension failure.
An investigation by The Sun has found hundreds of cases where employers haven’t invested their staff’s hard-earned pension contributions into their funds, shrinking their golden years pot.
Under a workplace pension scheme, a portion of your salary is automatically deducted and contributed to your pension fund each pay period.
Your employer also contributes to the scheme, and the government provides tax relief on the contributions.
For the most part, the worker has to trust that their contributions are being added to their fund – which grows over time.
But that doesn’t always happen, as our analysis has found, and experts say it’s smaller companies which are the most affected.
Steve Webb, former pensions minister and current partner at consultants LCP told The Sun: “Whilst automatic enrolment has been a huge success with over 10million more workers now saving into a pension, there is no doubt that there are thousands of cases when employers fail to comply with their legal duties.”
The Pensions Ombudsman (TPO) has upheld hundreds of complaints over the past few years where employers have failed to add their employee’s contributions to the scheme.
What’s worse is the issue is likely far more widespread but workers might not be aware, or they may have just not complained to the ombudsman.
In dozens of cases, savers were found to have had thousands of pounds not contributed to their funds.
Plus, the TPO also forced the companies to pay an extra amount in compensation for “serious distress and inconvenience” caused.
The Pensions Regulator (TPR) publishes stats on how many fines they have issued for non-compliance with the auto-enrolment rules.
[bc_video account_id=”5067014667001″ application_id=”” aspect_ratio=”16:9″ autoplay=”” caption=”How to track down lost pensions worth £1,000s” embed=”in-page” experience_id=”” height=”100%” language_detection=”” max_height=”360px” max_width=”640px” min_width=”0px” mute=”” padding_top=”56%” picture_in_picture=”” player_id=”default” playlist_id=”” playsinline=”” sizing=”responsive” video_id=”6351034419112″ video_ids=”” width=”640px”]Official figures show that since auto-enrolment started in 2012 the watchdog has issued over 250,000 fixed penalty notices for non-compliance with auto-enrolment duties.
In the most recent six months alone, 20,000 fixed penalty notices were issued.
[authenticated-scripts src=”%3Cscript%20class%3D%22palin-poll%22%20src%3D%22https%3A%2F%2Fwww.thesun.co.uk%2Fpollingwidgets%2Fv3%2Fwidget.js%3Fquestion_id%3D102054%26game%3Dpolling%22%3E%3C%2Fscript%3E” type=”embedded” width=”100″ /]What’s more, working with scheme providers, TPR has recovered more than £700million in missing contributions owed to savers since 2012.
Alice Haine, from Bestinvest by Evelyn Partners, the online investment service, said: “Discovering that your employer has failed to pay pension contributions into a workplace pension scheme will naturally be frustrating and extremely worrying for employees.
“This not only damages trust in an employer but also raises concerns about the effect the missing payments will have on pension savings.”
Alice added that while there have been several cases in recent years where “irresponsible” employers have withheld contributions, it is hard to estimate how widescale this issue is.
She said: “Cases where an employer has deliberately failed to make pension contributions – perhaps to save money in tough economic times, such as during the Covid pandemic – or failed to enrol a staff member into a workplace pension scheme at all – are damaging not only to the employee but also the reputation of the employer.
“But human error can play a part in these cases as well, such as an employer miscalculating a worker’s pensionable salary, something that can result in underpayments.”
Helen Morrissey, head of retirement analysis, Hargreaves Lansdown echoed this and said that the issues can arise due to administrative error, technical glitch, negligence or fraud.
Cash payouts
The Sun trawled through dozens of entries on the TPO website and found a number of decisions within the past three months where the ombudsman found that the company had failed to add the contributions to the employee’s pension.
Mr W filed a complaint with TPO against his company for not adding his pension contributions to his fund from July 2022 to September 2023. Even though £2,498.74 was deducted from his salary, no contributions were made.
Mr W found out about the issue in January 2023. Despite his employer’s promises, it wasn’t resolved by the time he left in October 2023.
The pension fund administrator reported the employer to TPR in January 2023.
Mr W formally complained to his employer in October 2023 and reached out to TPO in December 2023.
An Adjudicator confirmed that the employer had failed to make the contributions, causing Mr W financial loss and distress, based on his payslips and Trust account.
The Ombudsman ordered the employer to pay Mr W £1,000 for the distress and inconvenience, plus the outstanding contributions of £2,498.74.
The employer was also told to work with the Trust administrator to check if the late payments affected Mr W’s pension accrual and to cover any related admin fees.
[boxout headline=”‘I was made redundant and realised my employer hadn’t been paying into my pension'” intro=”IN another case we found, Mr S found his employer hadn’t been adding his cash to his pension after he’d been made redundant.”]Mr S filed a complaint with TPO against the company, for missing pension contributions to his scheme between July 2020 and September 2022.
Despite deductions from his salary, totalling £1,312.50, the contributions were not paid into the scheme. Mr S couldn’t provide payslips from this period as his employer didn’t supply them, but he did provide bank statements and HMRC records to support his claim.
Mr S started working for Digital Express Limited in March 2016 and was enrolled in the NEST scheme in March 2017.
When he was made redundant in September 2022, he realised the pension contributions were missing. On 6 March 2023, Mr S brought his complaint to TPO, who then contacted the employer for a formal response in July 2024.
The case was reviewed by an Adjudicator, who found that the employer had indeed failed to make the required contributions.
This conclusion was based on the evidence provided by Mr S and the scheme administrator, which showed the gross pay and the qualifying earnings for the relevant tax years.
The Adjudicator noted that the employer did not respond to any of TPO’s communications and had no reason to doubt the information provided by Mr S.
As a result, the Ombudsman directed the firm to pay Mr S £1,000 for the distress and inconvenience caused by the missing contributions.
Additionally, the employer was instructed to collaborate with the scheme administrator to determine if the late payments affected the number of units purchased in Mr S’s scheme account and to cover any reasonable administration fees for this calculation.
A TPR spokesperson said: “To ensure savers get the hard-earned pension pots they are due, we take robust action where necessary to make sure employers meet their automatic enrolment duties. This includes issuing fines and in some cases prosecution.
“Together with scheme providers, we have recovered more than £700million in missing pension contributions owed to savers since 2012.
“In the last financial year alone, £148million in contributions was recovered and paid into savers’ pensions.”
TPR said it wants to hear from workers if they’re concerned their employer isn’t paying in the pensions contributions they’re due or their workplace pension scheme is not being run properly.
You can report via TPR’s whistleblowing line or TPR may refer a saver to The Pensions Ombudsman or Money Helper where appropriate.
How do I check if my contributions are being added and what can I do about it?
Check if you’re enrolled
If you earn over £10,000 a year and are aged between 22 and state pension age, you should be enrolled in a pension scheme within three months of starting a new job.
Ask your employer if this doesn’t happen.
Keep an eye on your contributions
Hold onto your pension paperwork and regularly check that the money deducted from your salary is going into your pension.
Look over your pension statements to spot any issues.
Talk to your employer
If you notice missing or late contributions, write to your employer and ask them to sort it out.
Keep your payslips and pension statements handy as proof.
Your employer should explain what’s going on and when you can expect payments to be made.
Take action if needed
If you’re not happy with your employer’s response or they don’t reply within eight weeks, contact The Pensions Ombudsman.
They’ll investigate for free, and your employer has to comply with their decision.
If payments are over 90 days late, your pension provider must report it to The Pensions Regulator, who can make your employer pay or even fine them.