This week the Lord Chancellor announced changes to the personal injury compensation payments by lowering the discount rate from 2.5 per cent to -0.75per cent.
- New rate comes into effect 20th March 2017
- Compensation awards will rise
- Review schedules of loss and recalculate future losses
Although this sounds like a technical change it will have huge consequences for the level of damages paid out for future losses.
The discount rate governs the calculation of future losses in personal injury claims.
In finalising compensation awards, courts apply the discount rate calculation with the percentage linked in law to the assumed rate of return that injured
Claimants can get on their damages if they invest in the lowest risk investments – typically Index Linked Gilts.
The new rate was decided by Liz Truss and will come into effect soon (20 March 2017). This is the first time the rate has been changed since 2001.
‘The law is absolutely clear – as Lord Chancellor, I must make sure the right rate is set to compensate claimants,’ said Truss. ‘I am clear that this is the only legally acceptable rate I can set.’ Chartered Financial Planner and Managing Director of Simpson Millar Financial Services said, “This is an overdue decision but a very important result for Claimants as it ensures they will be properly compensated for their injuries and reduces the risk of compensation running out during their lifetime.”
At Simpson Millar Financial Services we specialise in providing independent financial advice for Claimants and their representatives.
Simpson Millar Financial Services can provide guidance on:
- Investment advice on damages settlements
- Consideration of a Personal Injury Trust
- Financial advice for Deputies and Trustees
- Pre settlement expert witness reports on: Periodical payments vs Lump sum
- Attendance at settlement meetings
- Analysis of offers (PPs Vs Lump sum)
- Cash flow forecasting to ensure the settlement lasts for the Claimant’s lifetime
- Financial planning/ budgeting expenditure