The Government says the Equitable Life compensation scheme could be delayed beyond its March 2014 deadline and run over its £1.5bn budget.
In June 2011, the Government began distributing compensation to Equitable Life policyholders who annuitised after 1992.
Last month, a National Audit Office report into the payments scheme hit out the Government for a lack of preparatory work.
It recommended the Government sets out a more realistic timetable and should be prepared for the scheme to run over budget by investing in improving service quality.
It also called on the the National Savings and Investments body, which administers the scheme, to outline how it will deal with the remaining payments.
NS&I estimates up to 20 per cent of policyholders will not be traced but the NAO said it should consider more cost-effective approaches for tracing.
In a written response to a parliamentary question from Conservative MP Philip Hollobone today, Treasury economic secretary Sajid Javid accepted the NAO report in full.
He said: “The NAO report provides some very useful guidance to the payment scheme. HM Treasury and National Savings and Investments will be implementing their recommendations in full.”