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Getting Started With the Ogden Tables - Simon Levene, 12 King’s Bench Walk

21/11/17. The MOJ’s announcement on 27th February 2017 that the discount rate for calculating future losses was to be reduced from 2.50% to –0.75% caused more excitement than personal injury litigants are used to. The following guide to the basics of the Tables might be useful.

By way of example, we will take a woman aged 35 who has been seriously injured in an accident. She has A-levels but no degree, and would have worked to the age of 65, earning £25,000 a year net. Because of her injuries she is only able to earn £10,000 a year net, she will have to retire at 60, and she will need care costing £2,700 a year.

The first thing to note about this scenario is the discount rate itself. This is designed to ensure that when a Claimant gets her damages in a lump sum, that sum will keep track with inflation. The problem goes like this:

  • Inflation is running at about 3% a year

  • On 2nd November 2017 the Bank of England announced that the Base Rate was now 0.5%

  • Assume that wages rise in line with inflation

  • If the Claimant invests her damages, she will gain 0.5% from the Bank, and lose 3% in inflation – a net loss of purchasing power of 2.5%. So, for example, the cost of next year’s care will rise from £2,000 to £2,060.

In theory, the discount rate compensates for the gap between (i) inflation and (ii) the rate of return on invested money. In practice, it doesn’t, but that is another matter. The Ogden Tables set out the multipliers to be used when calculating future losses. There are...

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