PI discount rate factors: views sought ahead of review

Factors to be taken into account when setting the discount rate for future damages in personal injuries cases are under review by Scottish ministers, who are inviting submissions from interested parties over the next month.

Under the Damages Act 1996, the Government Actuary is to begin reviews of the personal injury discount rates ("PIDR") for Northern Ireland and Scotland on 1 July 2024.

The method for calculating the PIDR is set out for Scotland in sched B1 to the Damages Act 1996. The framework is designed to create a fair and accurate way to set the discount rate, taking account of a range of factors, which for Scotland includes:

• the makeup of the notional portfolio (as laid out in para 12 of sched B1);
• the assumed period of investment (currently 30 years);
• the impact of inflation (currently allowed for by reference to the Retail Prices Index); and
• the standard adjustments that must be made by the rate-assessor to a rate of return (currently set at 0.75%, which represents the impact of taxation and the costs of investment advice and management; and 0.5% which is the further margin involved in relation to the rate of return).

Scottish ministers may, by regulations, adjust these factors. They would welcome views on the need or otherwise to adjust any of these factors, supported by evidence.

They would also welcome views/evidence on whether a single or multiple rates should apply (sched B1, paras 21 and 22), and on the preferred model if there were to be multiple rates.

Any response should be received by 11 July 2023. Further information is at this link.