What caused the NS&I £476m missing savings debacle and who will receive compensation?
National Savings and Investments is set to pay compensation to certain customers after it failed to properly trace the savings accounts of deceased savers.
Its reputation has hit the rocks, leaving the more than 26million savers who have money tied up with the bank questioning what has happened and how simple it is to access their cash.
This is Money reveals what happened at NS&I and why, how many are affected by the scandal and who will be compensated.
What is NS&I?
First established in 1861 as the Post Office Savings Bank, NS&I is a state-owned savings provider in the UK, best known for offering Premium Bonds.
Around 22million of its customers are Premium Bond holders where it runs a prize draw.
They hand out two £1million prizes a month, along with other prize categories running from £100,000 all the way down to £25.
It also offers other financial products like Individual Savings Accounts (Isas) and children's bonds, while its Income Bonds are popular for those like a monthly interest pay-out and a bumper £1million protection, versus £120,000 at banks and building societies.
All of its products are backed by the Treasury, meaning savers' money is fully backed by the Government, up to that £1million threshold.
NS&I uses the money raised from savers to fund public spending.
Statement: Pensions minister Torsten Bell made a statement in the House of Commons about NS&I this week
What has gone wrong?
NS&I has been plagued by errors following the launch of an ill-fated IT modernisation plan.
In 2020, it launched a business transformation programme, initially called Project Rainbow, which was aimed at modernising its operations and reducing its running costs.
Part of the transformation included replacing Atos, a French firm which had run NS&I's banking services and IT infrastructure for 27 years, with multiple smaller contracts.
But the costs involved in the modernisation programme have since increased from £1.3billion to around £3billion.
NS&I now also believes it may have to extend its contract with Atos, which itself suffered financial distress in 2024, until 2031.
In February 2026, a damning report by the public accounts committee (PAC), parliament's spending watchdog, branded NS&I's attempts to modernise as a 'full-spectrum disaster.'
The PAC said 'little transformation' had been delivered to date and claimed top brass at the state-backed bank failed to grasp how complicated the modernisation project would be and how long it would take to complete.
The spending watchdog said NS&I had exposed the taxpayer to 'unacceptable risk' while grappling to get its transformation off the ground.
In January 2026, the Treasury said it would be giving a further £109million to the modernisation programme, pending parliamentary approval.
What happened this week?
NS&I has admitted it failed to properly trace the savings accounts of some deceased customers over a number of years, leaving bereaved families struggling to access their cash.
It had been accused of short-changing bereaved families by losing track of investments, delaying payouts and withholding Premium Bond prizes.
This week, pensions minister Torsten Bell made a statement in the House of Commons outlining NS&I's failings in respect of affected bereaved families and what would be done to rectify the saga.
Bell said the Treasury was notified in December last year of a failure by NS&I to trace details of accounts for some customers who had died.
NS&I chief executive Dax Harkins was dismissed on Thursday as a result of the saga.
Sir Jim Harra has been appointed as chief executive on an interim basis. One hundred extra staff have been hired by NS&I to try and sort out the debacle.
Failings: NS&I has admitted it failed to properly trace the savings accounts of some deceased customers
Who is affected?
Approximately 37,500 people have been affected, with bereaved families facing delays accessing their relatives' Premium Bonds with a total value of up to £476million, NS&I said on Thursday.
That works out at roughly £12,693 on average per person.
Work to identify those affected is 'ongoing', Bell said, meaning the true scale of the issue remains unclear.
Around three quarters of the cases relate to the period between 2008 and 2025.
In a bid to put the scale of the debacle into context, NS&I said that in 2025 it received 211,800 new bereavement claims and repaid £4billion.
Bell acknowledged there may be tax implications for some affected estates as a result of the saga, adding the Government was working to resolve this problem.
Why did this happen?
NS&I said the errors affected bereaved families arose because its search process 'failed to identify all NS&I products'.
The bank said it had identified an issue where the estates of deceased customers were not always repaid money from all of their accounts after a bereavement claim.
It said: 'The issue has been resolved for current and new bereavement claims and robust measures have been introduced to ensure this does not happen again.'
Who will be compensated and when?
In his statement to the House of Commons on Thursday, Bell said the Government would 'ensure the appropriate compensation' was paid to some affected customers.
Bell said affected families should have their funds returned to them, including interest and compensation.
The pensions minister said the Hovernment had three priorities, namely addressing the cause of the tracing issues and finding a solution, 'reuniting' beneficiaries of late customers with any funds that NS&I holds, including 'compensation where appropriate' and completing NS&I's 'challenging' business transformation programme.
NS&I said it was 'working hard to ensure everybody affected is paid what is owed to them', adding that it would ensure 'customers' estates are appropriately compensated'.
We do not yet know how this will work in practice, including how and when compensation will be paid or the amount of interest those affected will get.
Affected customers will be contacted by NS&I.
The onus is on NS&I to identify affected customers, contact them and pay out any lost funds and compensation owed.
Bell urged customers not to pay for a solicitor or claims management firm to resolve the issue.
NS&I must publish a delivery plan in May on how it will work to reunite lost funds with their owners.
This will confirm the number of missing payments and how the representatives of estates will be contacted.
Bell said affected customer money is safe, adding that NS&I remained fully backed by the Treasury.
In the interim, if you have experienced problems tracing NS&I accounts you can still contact the bank directly by phoning 0800 092 1286 or in writing.
If you are not happy with its response, or do not receive one within eight weeks, you can escalate your complaint to the Financial Ombudsman Service.
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