KNOWLEDGE

The Personal Injury Discount Rate in Scotland

Morton Fraser Chair Jenny Dickson
Author
Jenny Dickson
Partner
PUBLISHED:
01 October 2019
Audience:
Individuals and Families
category:
Blog

The Government Actuary has recommended a new discount rate for personal injury claims in Scotland.  The recommendation is that the discount rate remains at -0.75%.

The rate is used to calculate the amount due to a pursuer for "future pecuniary losses". Future pecuniary losses are financial losses the pursuer will incur as a result of the injuries they have suffered, for example the cost of additional care needs or lost earnings.

The rate is applied to lump sum payments for future pecuniary losses.  Pursuers who receive their damages in a lump sum would normally invest that money and expect to earn interest. This rate ensures that interest is taken into account in the valuation of damages and the effects of inflation, taxation and expenses.

The discount rate is crucial in ensuring those who have sustained personal injuries are fairly compensated for their losses.  In simple terms, the lower the percentage, the higher the damages a pursuer will receive. Therefore, the lower the rate is, the greater financial pressure there is on public services that have large personal injury liabilities, such as the NHS.

The Damages (Investment Returns and Periodical Payments) (Scotland) Act 2019 sets out a new mechanism by which the Government Actuary is responsible for fixing the discount rate. This came into force on 1 July 2019. It was previously set by the Scottish Ministers and was usually in line with the rate which is applicable to claims raised in England and Wales.

The previous rate was - 0.75%, so his recommendation makes no change to the value of cases in Scotland..

This is in contrast to the change for England and Wales which was made on 5 August 2019. That saw the discount rate increase from - 0.75% to - 0.25%, which resulted in a fall in the level of damages in high value claims. Accordingly, there is now a difference in the value of payments for future pecuniary loss north and south of the border. 

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The content of this webpage is for information only and is not intended to be construed as legal advice and should not be treated as a substitute for specific advice. Morton Fraser LLP accepts no responsibility for the content of any third party website to which this webpage refers.  Morton Fraser LLP is authorised and regulated by the Financial Conduct Authority.