NS&I, the government-owned savings provider, is to begin paying long-standing claims from families of deceased clients, with the bill expected to exceed £181m.
NS&I expects to repay over 30,000 estates of deceased customers after identifying issue where the estates of deceased customers were not always repaid money from all of their accounts following a bereavement claim.
The figure is considerably lower than the £476m to 37,500 estates that was originally identified in March when the Minister for Pensions announced that NS&I had identified the issue.
So far the provider has paid out over £3m in repayments and compensation to 613 affected estates.
NS&I is currently responding to new claims within its service standard of 14 days.
Sir Jim Harra, interim CEO of NS&I, said: “I want to reiterate my apology to everyone affected by the bereavement claims issue. Repaying estates the money that is rightfully theirs and restoring our normal high service standards are key steps in putting things right, and this process is now underway.
“We know that regaining the trust of our customers will only come when we can show that we have learnt broader lessons from these issues, and we are committed to doing so.”
Key measures put in place for affected estates include:
- NS&I will contact all affected estates with holdings of £10 or more to reunite them with the full value of those holdings that should have been returned to them earlier. This will then be adjusted upwards to include either the higher of the interest accrued since the error occurred, or the Bank of England base rate plus one percentage point, in line with Financial Ombudsman Service (FOS) principles.
- There will be a full inheritance tax exemption for the holdings of the remediation population affected by the NS&I tracing error which are returned to the estates to which they belong. To further ease the administration of estates, the personal representatives or executors will not be liable for any Income Tax ordinarily due in their role on interest accrued before death or in the administration period.
- There is nothing that families, beneficiaries or the personal representatives and executors of deceased estates need to do, NS&I says. NS&I will contact the personal representatives and executors of estates with holdings of £10 or more directly. Payments to affected estates will continue over the coming months and are expected to conclude in the first half of 2027.
NS&I says the error happened because the search process used when handling a bereavement claim failed to identify all NS&I products. The issue has been resolved for current and new bereavement claims from January this year.
NS&I has apologised for the error and has taken on 100 extra staff to support the repayment process. NS&I is also looking at where it can make further improvements to its bereavement service, it says.
The provider issued the bereavement update as part of its annual report for 2025/26.
NS&I reported £62.4bn in gross inflows (including reinvestments) for 2025/26, an increase from £57.3bn reported the previous year and in line with 2023/24. It delivered £12.1bn of net financing to the government in 2025/26.
The results also showed that in 2025/6, NS&I paid out over 72m Premium Bond prizes worth over £4.8bn.
NS&I is one of the largest savings organisations in the UK, offering a range of savings and investments to more than 24 million customers. All products offer 100% capital security as NS&I is backed by the Treasury.
NS&I’s unaudited results for the first quarter (April-June 2026) of the financial year 2026-27 show that NS&I delivered £1bn of net financing to the Government.