National Savings and Investments (NS&I) will begin contacting thousands of families affected by a missing savings scandal next week, as the bank confirmed the total amount owed. The state-backed bank revealed that up to 34,000 estates are affected, with £367m mistakenly withheld from bereaved families.
Background of the Scandal
In March, the chief executive of NS&I was forced out after it emerged that long-running problems with tracing accounts of deceased customers had led to funds being withheld. Initially, NS&I estimated that as much as £476m was involved, but that figure has now been revised down to £367m.
Interim CEO Apologises
Sir Jim Harra, the former HM Revenue and Customs boss appointed as interim chief executive, repeated the bank's apology: "This issue should not have happened. Beginning the process of repaying these funds is a key step in putting things right."
Why the Errors Happened
Harra explained that the errors occurred because the search process used when handling a bereavement claim failed to identify all relevant NS&I products. "The issue was resolved for current and new bereavement claims from January 2026 and operational processes changed so that it does not reoccur." However, he admitted that the new, more thorough search process "takes longer than before and has unfortunately resulted in delays to current and new claims."
Impact on Families
NS&I holds more than £240bn on behalf of 24 million customers and operates a monthly draw for premium bond holders. There have been complaints that it failed to pay out cash prizes to families of deceased savers, delayed payments, and lost track of money. To ensure estates are not disadvantaged, payments will be adjusted upwards by either the interest accrued since the error or the Bank of England base rate plus one percentage point, whichever is higher. Additionally, payments made as a result of the tracing error will be exempt from inheritance tax, and executors will not be required to pay income tax on sums that would ordinarily be due.
Next Steps
NS&I reiterated that affected families are not required to do anything. The bank will contact personal representatives and executors of estates with holdings of £10 or more directly. Pensions minister Torsten Bell said this will happen in phases: "NS&I will begin contacting the first cohort next week, with payments made shortly after contact. NS&I aims to return holdings to their rightful owners as swiftly as possible and expects to have completed this remediation programme in the first half of 2027." Bell added that Harra is leading a wider review into the background of the tracing problem and what lessons must be learned, with a report due before the summer recess.
