National Savings & Investments (NS&I) has admitted it failed to return around £367 million belonging to deceased customers
Thousands of bereaved families embroiled in the National Savings & Investments (NS&I) savings scandal may face a further wait before receiving money owed to them. The state-backed bank confirmed repayments won’t all be finalised until mid-2027.
The Treasury-backed savings organisation announced it will start contacting affected families next week, following revelations that approximately £367million belonging to deceased customers had not been returned to their estates over a 17-year period. Around 34,000 estates are believed to have been impacted by the error, which led to the departure of former NS&I chief executive Dax Harkins earlier this year.
The controversy revolves around failures in the bereavement tracing system used by NS&I, which operates Premium Bonds and manages over £240billion of British citizens’ savings. Officials acknowledged that searches had failed to identify all of a deceased customer’s NS&I holdings, resulting in money remaining dormant rather than being distributed to relatives or executors.
Sir Jim Harra, the former HMRC chief brought in as interim chief executive, issued a fresh apology for the debacle. He stated: ‘This issue should not have happened. Beginning the process of repaying these funds is a key step in putting things right.’
Yet families expecting swift compensation received another setback after NS&I acknowledged the new verification process is taking considerably longer than anticipated. The organisation confirmed it aims to complete all repayments by the end of June 2027.
Millions stuck for years
The mistakes impacted bereavement claims submitted between 2008 and 2025. NS&I initially calculated that as much as £476million might have been held back, but has now reduced the figure to £367million. Specialists suspect some of the missing accounts may relate to old paper Premium Bonds and savings products from the 1950s and 1960s which weren’t properly detected by computerised searches.
NS&I stated that affected estates don’t need to act straight away as the institution will reach out to executors and personal representatives directly where at least £10 is outstanding. Initial payments are anticipated shortly following contact.
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What NS&I says
- Total owed to families £367m
- Number of estates affected Up to 34,000
- Period errors occurred 2008 to 2025
- Repayment timetable By June 2027
- Compensation Interest plus extra payments
Tax treatment Exempt from inheritance tax
To compensate families for delays, NS&I said estates will receive whichever is greater:
- the interest originally due; or
- the Bank of England base rate plus 1 percentage point.
The organisation also confirmed repayments connected to the error will be exempt from inheritance tax, while income tax typically payable on savings interest will also be waived.
Bereavement delays deteriorate
The repayment scheme arrives as NS&I grapples with broader delays in processing bereavement cases. A new claims procedure launched in January has considerably slowed response times. Sarah Coles, head of personal finance at AJ Bell, said: “NS&I is hoping to bring down the curtain on its now notorious bereavement drama by reuniting the estates of deceased customers with the money it failed to track down. Unfortunately, for anyone trying to process the estate of a loved one who had NS&I holdings, the administrative burden continues. NS&I is now taking eight weeks to respond.”
NS&I confirmed it has brought in 100 additional members of staff and is aiming to reduce processing times back to its two-week target by the autumn.
Questions over £1.3bn IT overhaul
The crisis has further intensified scrutiny of NS&I’s troubled modernisation programme, known internally as Project Rainbow. The overhaul, launched in 2020, was intended to update ageing systems but is now reported to be at least £1.3billion over budget.
Originally scheduled for completion in March 2024, it is now not expected to wrap up until March 2028. NS&I previously told MPs that rebuilding 25 years of IT infrastructure had proved ‘more difficult than originally envisaged’.
Torsten Bell, the pensions minister, said Sir Jim had also been tasked with conducting a broader investigation into how the failures occurred and ‘what lessons must be learned’.
