Premium Bonds bank will proactively contact customers affected by a tracing error and they expect to receive a letter directly
NS&I announced this afternoon that, from next week, it will begin reaching out to the estates of deceased customers who, due to a blunder, were not refunded money from all of their NS&I accounts following a bereavement claim.
Approximately £470m in deposits and 37,500 customers have been affected by failures to trace the account details of some NS&I customers after their deaths, Pensions Minister Torsten Bell told MPs — an issue he revealed the government had become aware of in December.
NS&I confirmed today that it will contact all affected estates holding £10 or more, in order to reunite them with the full value of those holdings that should have been returned to them sooner. It added: “To ensure estates have not been disadvantaged by the delay, this will then be adjusted upwards to include either the higher of the interest accrued since the error occurred, or the Bank of England base rate plus one percentage point, in line with Financial Ombudsman Service (FOS) principles.
“There will be a full inheritance tax exemption for the holdings of the remediation population affected by the NS&I tracing error which are returned to the estates to which they rightly belong. To further ease the administration of estates, the personal representatives or executors will not be liable for any Income Tax ordinarily due in their role on interest accrued before death or in the administration period.
“There is nothing that families, beneficiaries or the personal representatives and executors of deceased estates need to do. NS&I will contact the personal representatives and executors of estates with holdings of £10 or more directly. Payments to affected estates will run over the coming months and are expected to conclude in the first half of 2027.”
NS&I said the mistake occurred because the search procedure used when processing a bereavement claim failed to identify all NS&I products. It stated the problem has been resolved for current and new bereavement claims, with ‘robust measures have been introduced to ensure this does not happen again’
Sir Jim Harra, Interim Chief Executive, NS&I, said: “I apologise to everyone who has been affected by this issue. Beginning the process of repaying these funds is a key step in putting things right.
“We need to ensure that everybody who makes a bereavement claim with NS&I is treated sympathetically and has their case processed as quickly as possible. Today, this process is taking longer than it should. We have brought in additional staff to get the service back on track.”
Pensions Minister Torsten Bell today in a written statement said: “These failures relate to past tracing and operational processes and do not reflect current practice. I recognise the distress and inconvenience that these shortcomings may have caused to those that have suffered bereavements.
“The Treasury has instructed NS&I to put this right swiftly and fairly, requiring a delivery plan detailing how they plan to do so to be published during May. NS&I has now completed extensive work to understand the affected population and to design a remediation approach. Today NS&I is publishing the Delivery Plan that they will follow to ensure proactive timely contact, payment of outstanding holdings, and appropriate compensation.
“The current remediation population is estimated at up to 34,000 cases, with a total value of approximately £367 million.”
On 26 March, NS&I, backed by external advisers, estimated that roughly 37,500 bereavement claims totalling £476 million could have been impacted by this issue. As the review has moved forward, this figure has decreased and is expected to fall further. As of 19 May, NS&I’s assessment indicates that up to 34,000 estates with a combined value of approximately £367 million have been affected.
NS&I will reach out to those estates where the capital in the deceased customer’s accounts, plus accrued interest, amounts to £10 or more. The de minimis threshold has been set lower than in some other redress cases, reflecting the priority placed on returning funds to those affected, while avoiding disproportionate administrative burdens and unnecessary disturbance in cases involving the smallest holdings.
