Julian Chamberlayne discusses the factors that need to be considered when setting the new discount rate
- Longevity, prices and earnings inflation all compound the investment risk that claimants face under the MoJ’s planned change to setting the discount rate.
On 7 September 2017, the Lord Chancellor, David Liddington, laid draft legislation before Parliament incorporating a proposed new methodology for setting the discount rate by which future losses for those with long-term injuries will be compensated. In the first of this two-part series I considered what proportion of seriously injured claimants should we as a society be prepared to accept will be under compensated while still claiming to maintain a framework of laws that provide for 100% compensation. Here, I look at some of the key factors beyond investment risk that ought to be considered by the Lord Chancellor when setting the new rate.
The Ministry of Justice’s (MoJ’s) new methodology is said to be based on how claimants actually invest, derived from evidence gathered during the consultation.
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