NS&I to pay compensation to bereaved families over ‘lost’ £476m of savings

National Savings & Investments (NS&I) is set to return approximately £476 million in unclaimed Premium Bonds to the estates of 37,500 deceased customers. Administrative errors meant the government-backed bank was unable to trace funds, causing significant distress for thousands of families and, for some, avoidable financial hardship.

NS&I offers savings and investments to around 24 million customers in the UK, and its products are deemed to offer extra security as they are backed by HM Treasury. The institution currently holds around £240 billion in customer deposits.

What we know about the ‘lost’ funds at NS&I

Tracing issues at NS&I caused mistakes in locating thousands of deceased customers’ NS&I Premium Bonds, preventing monthly prize draw winnings and funds from reaching their estates. Bereaved families were told that accounts did not exist and that no record could be found of their deceased family member’s holdings, due to errors within NS&I’s systems.

Several reports described families’ frustrations when they were told that accounts they believed existed and, in many cases, had been listed in the deceased’s last will and testament, did not exist.

The Treasury began investigating reports of the failure at NS&I in December 2025 and engaged external advisers from Ernst & Young and legal experts to get to the bottom of the matter. Dax Harkin, who had been Chief Executive at NS&I since March 2023, has been forced to resign following the investigation. The Pensions Minister, Torsten Bell MP, has replaced Harkin, with Sir Jim Harra, who served as HMRC chair for five years until 2025. Further resignations had been expected, and just a day later, it was revealed that People and Finance director Ruth Curry had resigned.

Who is affected by the mistakes at NS&I?

The Treasury checked over 34 million customer records and although it says that the “work is ongoing”, it suggests that up to a maximum of 37,5000 customers with up to £476 million in deposits have been identified.

The estimated 37,500 customer accounts belong to people who have died, three-quarters of which were related to cases raised between 2008 and 2025. In his statement to Parliament, Pensions Minister Torsten Bell said that, “On 18th December 2025, NS&I notified the Treasury of an operational failure to comprehensively trace accounts for some customers who had passed away. The result of that failure is that not all savings were identified by NS&I and paid to the beneficiaries of their estates as they should have been. Specifically, processes failed to comprehensively trace some customer holdings where they were spread across multiple profiles or systems.”

What happens next?

The investigation continues under the remit of the newly appointed Chief, Harra, and a further update is expected in May 2026. Pensions Minister Torsten Bell said that he had directed NS&I to “proactively contact representatives of estates to ensure they receive the funds that they are due” and he was keen to point out that “deposits belong to customers. Returning them in no way represents an additional liability to the taxpayer”, confirming that “savings are 100% safe”.

Will affected families receive compensation?

In his statement to Parliament, Pensions Minister Torsten Bell confirmed that bereaved families would “receive the funds that they are due, including interest on savings; and the compensation that, where appropriate, will be paid”. While interest that has accrued on savings is likely to be returned to customers via the existing NS&I funds, any compensation to address legal bills, expenses, and the additional distress experienced by bereaved families will not. Bell’s comments also fail to recognise the cost burden of hiring 100 additional NS&I staff members needed to address the issues.

Will there be tax to pay when NS&I payouts are made?

If you are affected and are due to receive funds from NS&I, you should check whether the money is subject to tax. This is because any funds that would have been liable for inheritance tax based on the deceased person’s overall estate - and whether these exceeded current thresholds - could still apply. However, in many cases, the affected estates will likely have already been settled and tax paid on the assets known at the time.

As it stands, the Treasury and NS&I have not made it clear whether taxes will be recouped where applicable. Bell said that we “recognise that there may be tax implications for affected estates and want to avoid bereaved families facing disproportionate disruption and administrative costs as a result of the error.” He went on to state that "further support was being explored at this stage" and that they would “set this out alongside NS&I’s delivery plan in May”.

Although NS&I is not regulated under the Financial Conduct Authority (FCA), the government pointed out that it “will ensure that the appropriate compensation is paid along the lines of how the FCA encourages best practice.” While this might feel reassuring to some, general complaint guidelines under the FCA state that, “while a complainant might choose to instruct someone to represent them, or to give expert advice or support, we do not usually reimburse the costs incurred for this, even if a complaint is upheld.”

What you should do if you think you are affected

Pensions Minister Torsten Bell reiterated that the onus would be on NS&I to act and that further information would be available on the bank's website. If you think you may be affected, the government advises waiting for NS&I to proactively reach out to them as they work through the cases. Those who continue to experience problems tracing accounts can still complain to NS&I directly by calling 0800 092 1286 or they can be contacted in writing.