Katherine Deal assesses the current stance on discount rates
Scenario: a claimant aged 30 suffers a serious accident and loses his lower leg. He is 25% liable for the accident and does not want an order for periodical payments because no annual payment will compensate him for the actual expense to which he will be put in the future. He would rather take his chances in the market and invest a lump sum to provide him with sufficient return year on year. Nor is the defendant amenable to prolonging the case—it is quite happy to make a lump sum payment and close its file.
Our claimant’s care needs are costed at £20,000 per annum and will continue for life. Using the conventional discount rate of 2.5% and the 7th edition of the Ogden Tables, the multiplier will be 29.60, which will result in an award for him reflecting his contributory negligence of £444,000. But a discount rate of 0.5% would give a multiplier of 48.68, and a total award of £730,200. Should
