The savings and Premium Bonds provider notified the Treasury in December of an operational failure to trace accounts
Premium Bonds customers have been urged to check over their holdings(Image: Getty)
NS&I is preparing to pay out hundreds of millions of pounds after bereaved families face delays accessing their loved ones’ savings.
The savings and Premium Bonds provider notified the Treasury in December of an operational failure to trace accounts.
NS&I is said to have found around 37,500 customers with up to £476million in deposits were affected by the error, after reviewing over 34 million records.
Three-quarters of cases relate to the period between 2008 and 2025, according to pensions minister Torsten Bell.
He said: “This number is likely to fall in future – but while it represents less than 0.2% of NS&I’s customers, it is still far too many.”
NS&I offers a range of savings and investments to more than 24 million customers, including more than 22 million Premium Bonds holders. It is backed by the Treasury.
What happens next and will I receive compensation?
Mr Bell told the House of Commons on Thursday that the Treasury is working with external advisers including EY and legal experts to identify the scale of the errors.
NS&I said it will ensure customers’ estates are appropriately compensated and more details will be published in May. At the moment, it is not yet clear how or when compensation will be paid.
In the meantime, anyone who may have been affected is advised to wait for further updates and to avoid contacting claims management companies or solicitors, as these will take a cut of any money potentially owed.
NS&I said it will contact those who have been affected.
Mr Bell said: “NS&I will proactively contact representatives of estates to ensure they receive the funds they are due, including interest on savings, and the compensation that, where appropriate, will be paid.
“There is no need for individuals to waste money on a claims management company or solicitor.”
Mr Bell added said the Government also recognises that “there may be tax implications for affected estates” in the form of Inheritance Tax.
This is because any money made from Premium Bonds is exempt from Income Tax and Capital Gains Tax, but not from Inheritance Tax.
You don’t have to pay the tax on the first £325,000 of your estate, which goes up to £500,000 if it includes a property that you pass to your child or grandchild.
Married couples can also pass on up to £1million tax-free by combining their individual nil-rate bands.
Mr Bell said the causes of a tracing issue which affected NS&I customers has “been addressed and will not affect customers going forward” and said NS&I has hired an additional 100 staff.
NS&I said in a statement that the errors had happened because “the search process used when handling a bereavement claim failed to identify all NS&I products”.
It added: “The issue has been resolved for current and new bereavement claims and robust measures have been introduced to ensure this does not happen again.
“NS&I apologises and is extremely sorry for these errors. It is working hard to ensure everybody affected is paid what is owed to them.
“Families, beneficiaries and deceased customers’ estates do not need to take any immediate action. NS&I will contact estates that are affected and will publish further information for the beneficiaries of those estates in due course.”
NS&I chief executive Dax Harkins is being replaced by former HMRC boss Sir Jim Harra.