The former head of National Savings and Investments (NS&I) is facing scrutiny after stepping down amidst a scandal that left tens of thousands of customers without access to their relatives’ premium bonds. Despite the controversy, the company’s records indicate that he may still receive a pension valued at more than £1.5 million.
Dax Harkins, who took on the role of NS&I’s chief executive in April 2023, resigned on Thursday following discussions with officials from the Treasury.
The issue came to light when it was revealed that for the past 17 years, around 37,500 families were not paid millions of pounds they were owed.
NS&I has acknowledged that bereavement claims, involving customer deposits potentially totaling up to £476 million, may have been mishandled.
The organization faces allegations of mismanaging investments, postponing payouts, and withholding premium bond prizes, causing financial distress to numerous families.
In the meantime, Harkins is set to depart with a civil service pension estimated to provide between £65,000 and £70,000 annually, with increases tied to the Consumer Prices Index.
As the civil service scheme is a defined benefit scheme, he will receive a guaranteed income for every year of his retirement.
As of March last year, the latest set of NS&I accounts available show he had a pension with a cash equivalent transfer value (CETV) of £1.346 million.
Dax Harkins, who has served as chief executive of NS&I since April 2023, left the company on Thursday morning after a meeting with Treasury officials
Pensions minister Torsten Bell (pictured) said NS&I did not respond fully to previous warning signs
This is the estimate from a pension provider of what they think it is worth over the course of Harkin’s retirement.
But because of yearly inflationary rises applied to civil service pensions, John Ralfe, a pensions consultant, told the Times it would likely be an underestimate.
He said: ‘If you said £1.5 million, you would still be understating it.’
The annual report, published last July, stated that Harkins received an annual salary of £185,000 to £190,000 during his time as chief executive, plus pension benefits worth £110,000 and additional benefits in kind.
Assuming he paid £65,000 a year, then taxpayers would have spent £1.63 million paying out his pension over the course of a 25-year retirement.
Former HMRC boss Sir Jim Harra will replace Mr Harkins as chief executive on an interim basis to ‘provide a fresh start’, pensions minister Torsten Bell announced on Thursday.
He told the Commons: ‘I also want to make sure NS&I has the very best leadership in place.
‘Effective from today, I have appointed Sir Jim Harra, former HMRC first permanent secretary, to take over as the chief executive of NS&I on an interim basis, to provide a fresh start for NS&I’s next phase of development.
‘I recognise his predecessor Dax Harkins’ 22 years of public service at NS&I.’
He added: ‘As well as providing leadership to the organisation, Sir Jim will undertake a review over the next three months to spell out in detail the background to this tracing problem and to set out what lessons must be learned for NS&I going forward.
‘I have discussed this with Sir Jim and I’m confident that his extensive experience will help guide NS&I in the months ahead, and I will ensure Sir Jim’s review is shared with the chairs of the Treasury and the Public Accounts committees upon completion.’
Harkins will leave with a civil service pension worth between £65,000 and £70,000 a year, a figure that will rise in line with the Consumer Prices Index
Shadow Treasury minister Mark Garnier accused the Government of ‘sitting on their hands’ over the ‘poor performance’ of NS&I.
Speaking in the House of Commons, he said: ‘Why has this Government been sitting on their hands?
‘The poor performance and a botched digital transformation means that the NS&I are short-changing savers at a time when raising money for the Government has never been more needed.’
Mr Garnier added it was ‘concerning’ that the Treasury were notified of the operational failures on December 18, but only made a statement to Parliament after an article in The Daily Telegraph three months later.
He asked: ‘Can the minister please explain why it has taken him over three months to come forward with this statement?
‘People have been let down. Whilst NS&I have apologised for these mistakes, this will be of little comfort to those thousands of people who have lost out. The Government does need to act swiftly and the families need to be compensated.’
NS&I did not respond fully to previous warning signs, pensions minister Mr Bell, who also sits in the Treasury, told the Commons.
He said in a statement: ‘The FCA (Financial Conduct Authority) took enforcement action in 2018 against Santander relating to the tracing of accounts following notification that a customer had passed on. This received significant attention at the time.
‘However, what is now clear is that NS&I and its suppliers did not respond to those warning signs as fully as I and, more importantly, their customers would expect. Nor did the last government act.
‘Bereaved families whose loved ones held accounts with NS&I will rightly be anxious about this news.’
The causes of a tracing issue which affected NS&I customers has ‘been addressed and will not affect customers going forward’, Mr Bell said.
He added that ‘this issue is about tracing, not the security of any funds’ held by NS&I, insisting that ‘savings are 100 per cent safe’.
NS&I is responsible for reuniting beneficiaries with the money they are due, the pensions minister told MPs, adding ‘there is no need for individuals to waste money on a claims management company or solicitor’.
Mr Bell told the Commons: ‘NS&I has put in place a dedicated programme team and it’s hired an additional 100 staff.
‘I have asked them to publish a delivery plan in May detailing how they will take forward this work to reunite funds with their owners.
‘This will cover the number of cases affected, how 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.
‘I want to reassure people that the onus is not on them but on NS&I to act, to contact estate representatives and to reconnect beneficiaries with the money they are due.’
The Treasury and NS&I have been contacted for comment.
