23 July 2020 | Firm news | Article by Laura Bailey
The 8th edition of the Ogden Tables has been published by the Government’s Actuary Department. This comes 9 years after the 7th edition was published in 2011.
The Ogden Tables are used within personal injury and fatal accident claims, and are designed to assist those concerned with calculating lump sum damages for future losses in the UK.
The original tables were prepared in 1984, and the multipliers at that time were based upon the retirement age of 65 for males and 60 for females. At their inception, the tables did not take any contingencies into account, other than mortality. Over time, the further editions of the tables have provided various additional multipliers to include a range of retirement ages up to the age of 80, and they have updated their morality assumptions in order to reflect societal trends.
Practically speaking, the multipliers specified within the Ogden Tables are the figure by which an annual loss is multiplied in order to calculate a capitalised sum, taking into account factors including accelerated receipt, mortality risks and, in relation to claims for loss of earnings and pension, discounts for contingencies other than mortality. Multipliers are calculated by reference to an annual assumed interest rate after tax and inflation, known as the discount rate. The discount rate was last set in at -0.25% England and Wales in 2019 following a lengthy consultation. The rates in Scotland and Northern Ireland differ at -0.75% and +2.5% respectively.
The new edition of the Ogden Tables applies updated mortality data published by the Office of National Statistics (ONS) in October 2019 and makes allowance for changes in/different applications of the Discount Rate throughout the UK. This change has resulted in the reduction of lifetime multipliers for both men and women, although women are more affected.
The Chairman of the Ogden working party, William Latimer-Sayer states:
For younger claimants, the approximate reduction in life expectancy between the 7th and 8th editions of the Tables is about one year for men and two years for women. This reflects a difference in overall predicted life expectancy of 1-2%. However, for older claimants, the difference in predicted life expectancy can be as much as 8-9%.
As a consequence this could potentially impact the value of claims being pursued by older claimants who could suffer a much larger drop in the overall value of their claim than otherwise would have been the case.
A welcome addition to the 8th edition of the Ogden Tables are the Additional Tables which provide a helpful way of determining multipliers from any age at trial to any future age at discount rates of the jurisdictions of England and Wales, Scotland and Northern Ireland respectively.
There is also new guidance on the calculation of pension claims, reflecting auto-enrolment changes, the increase in defined contribution pension schemes and also the calculation of fatal accident claims.
Overall these changes will have the greatest impact in catastrophic injury claims, including claims involving severe brain and spinal injury. As ever at Hugh James, as acknowledged leading national catastrophic injury specialists, we would be delighted to discuss with you how we can maximise the value of an individual’s claim in the light of these changes.