Discount Rate change ‘overdue, welcome and will help seriously injured people’
A change in the ‘Discount Rate’ applied to compensation awards in personal injury cases is overdue, welcome and should help ensure individuals who have been seriously injured through no fault of their own receive full and fair compensation for their injuries and losses.
The announcement that the Discount Rate is to change from 2.5% to -0.75% (minus 0.75%) was made by the UK Government earlier today (Monday 27th February). It is to still to be confirmed whether the change will apply in Scotland.
Prior to today’s announcement, the rate of 2.5% was applied to personal injury damages based on a 2001 calculation of the rate of return individuals could achieve from investing in low-risk government bonds. Such investments do not currently achieve this level of return. The result is that victims of accidents who have suffered severe and life changing injuries have been left hundreds of thousands of pounds short of what they need to live independently. Their only option was to take risks with their investments if they are to avoid their damages running out early.
The revision of the rate to – 0.75% (minus 0.75%) reflects the considerable economic changes that have taken place since 2001 and will mean individuals receiving a lump sum award of damages after a serious injury will actually receive and retain the full value of this compensation, allowing many to live more independently and giving others the security of knowing they will be able to meet future care costs.
“Today’s announcement of the change in the discount rate is overdue, welcome and very good news for individuals who have been seriously injured.
“The discount rate is used to calculate future losses, often including wage loss, cost of care or the support a seriously injured person needs in the future. We have known for some time that the discount rate is not appropriate for seriously injured claimants.
“This announcement should help give clarity to claimants and their advisors, though we await confirmation from the Scottish Government that the rate will apply here and further announcements from the UK Government. The most important priority must be giving seriously injured claimants better security that the compensation they recover will fully compensate them for the loss. “