27 February, 2017
The Lord Chancellor announces changes to personal injury compensation payments
The Lord Chancellor has today announced changes to personal injury compensation payments.
When victims of life-changing injuries accept lump sum compensation payments, the actual amount they receive is adjusted according to the interest they can expect to earn by investing it.
In finalising the compensation amount, courts apply a calculation called the Discount Rate – with the percentage linked in law to returns on the lowest risk investments, typically Index Linked Gilts.
Today’s decision by Elizabeth Truss to lower the Discount Rate from 2.5% to minus 0.75% was made in accordance with the law and in her capacity as independent Lord Chancellor.
The law makes clear that claimants must be treated as risk averse investors, reflecting the fact that they are financially dependent on this lump sum, often for long periods or the duration of their life.
Compensation awards using the rate should put the claimant in the same financial position had they not been injured, including loss of future earnings and care costs.