NS&I to contact thousands affected by savings scandal, confirms £367m owed

National Savings and Investments bank will start to contact thousands of families affected by a missing savings scandal next week, as it confirmed how much they are owed.

In March, the chief executive of the state-backed bank was forced out after it emerged there had been long-running problems with the tracing of accounts belonging to customers who had died.

At the time, NS&I estimated that as much as £476m had been mistakenly withheld from families. That figure has now been revised down to £367m with up to 34,000 estates affected, according to a short update published on Tuesday.

Sir Jim Harra, the former HM Revenue and Customs boss parachuted in as the bank’s interim chief executive, repeated the bank’s apology: “This issue should not have happened,” he said. “Beginning the process of repaying these funds is a key step in putting things right.”

NS&I is one of the largest savings organisations in the UK, holding more than £240bn on behalf of 24 million customers, and operates a monthly draw for holders of premium bonds. There have been complaints that it failed to pay out cash prizes to the families of deceased savers, and reports it delayed payments and lost track of money.

The errors happened because the search process used when handling a bereavement claim failed to identify all relevant NS&I products, Harra said. “The issue was resolved for current and new bereavement claims from January 2026 and operational processes changed so that it does not reoccur.”

However, there was a sting in the tail as Harra admitted this new, more thorough search process “takes longer than before and has unfortunately resulted in delays to current and new claims”.

He said: “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.”

NS&I reiterated that affected families were not required to do anything. The bank is going to contact the personal representatives and executors of estates with holdings of £10 or more directly.

The 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 was tasked with leading a wider review into the background of the tracing problem at the bank, and “what lessons must be learned”. He is due to report back before the summer recess.

To ensure estates have not been disadvantaged by the delay, payments will be adjusted upwards by whichever number is higher: the interest accrued since the error occurred, or the Bank of England base rate plus one percentage point.

NS&I also said payments that were made as a result of the tracing error would be exempt from inheritance tax. At the same time, executors would not be required to pay income tax on the sums that would ordinarily be due.