NS&I to start paying out millions to bereaved families after ‘operational failure’
NS&I will start contacting tens of thousands of estates from next week outlining how they will be reunited with their loved ones’ money.
NS&I has laid out a timeline of when tens of thousands of bereaved families will be reunited with lost savings.
The government-backed savings bank acknowledged in March that an “operational failure” had led it to lose track of hundreds of millions of pounds’ worth of deceased customers’ money.
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It was originally estimated around 37,500 bereavement claims totalling £476 million in value had been affected by the operational error.
However, NS&I has confirmed that, as of 19 May, it is in fact 34,000 estates who are missing out on £367 million. The savings bank said this number could reduce further.
Sir Jim Harra, interim chief executive of the NS&I, said: “This issue should not have happened and I want to repeat the apology NS&I made in March to everyone who has been affected by it. Beginning the process of repaying these funds is a key step in putting things right.
“Dealing with the death of a loved one is a difficult and upsetting time. We know we need to do all we can to make the process of accessing a deceased saver’s NS&I holdings as straightforward as possible for personal representatives and executors of estates.”
How will affected estates be contacted and when will payments be made?
NS&I said it will start sending out letters to executors and personal representatives of impacted estates with holdings of £10 or more from next week, with any payments following “soon after”.
Letters will be sent out in weekly batches, with payments to all affected estates expected to be made by midway through 2027.
The letters will say how much estates will be repaid, as well as how any legal costs or administrative fees incurred through the payments can be reclaimed.
A dedicated NS&I phone number will also be provided in the letter.
NS&I said where an estate can’t be contacted, it will continue to hold any funds which will continue to accrue interest until the estate gets in touch.
Will payments be taxed?
Torsten Bell, minister for pensions, confirmed to the House of Commons on 19 May no inheritance tax will be owed on any reimbursed holdings.
Executors of estates will also not be liable for income tax on any interest accrued before the death of a loved one.
NS&I introduces new search process following operational error
The error which led to the 34,000 estates’ money going missing occurred due to the search process used when handling a bereavement claim failing to identify all NS&I products.
NS&I said the issue had been resolved and a new process was introduced in January 2026, however, this new system has resulted in delays for current and new bereavement claims.
The typical wait time for NS&I to respond to bereavement claims is two weeks, but the current response time is eight weeks.
NS&I said it has brought in an extra 100 staff to improve the service which it expects to be back to normal by autumn 2026, with Sir Jim apologising for the delays.
Sarah Coles, head of personal finance at investment platform AJ Bell, commented: “Anyone who has had to deal with an estate is no stranger to delays.
“Executors have to stick to strict deadlines, and for estates where inheritance tax is due, money has to be handed over within six months of the end of the month in which the person died.
“It means any delays in the process can be expensive as well as frustrating. The extra six weeks’ wait from NS&I will come as yet another headache for anyone slogging through the process.”
