The new Personal Injury Discount Rate set in Northern Ireland and Scotland

Under Part 2 of the Civil Liability Act 2018 the Lord Chancellor must conduct a review of the personal injury discount rate every five years. Under the timeline set the review of the discount rate in England and Wales had to commence in July 2024 and the Lord Chancellor has until 11th January 2025 to make the determination regarding the updated rate for our jurisdiction.

In the meantime, however the rate for both Northern Ireland and Scotland has been announced in September. The Government Actuary has determined that the rate in both jurisdictions should be +0.5%. The new rate came into effect on 27 September 2024. This is a change from -1.5% to +0.50% for Northern Ireland and from -0.75% to +0.50% for Scotland. The Government Actuary indicated that this increase was primarily due to improved projected investment returns since the previous PIDR reviews.

These changes could be an indication of what is to come for the UK in January in respect of our applicable PIDR. Given however that the discount rate in England and Wales is currently -0.25%, it is clear that there is not always a consistent rate applied across the parts of the UK, and as such there is no guarantee of the same.

An adjustment in the discount rate will impact the calculation of future loss claims in personal injury cases, with a higher PIDR meaning that compensation awards to the claimant will generally be lower, and as a result the rate when announced will have repercussions for any future loss reserve.

Advice from Forbes on the change will follow the announcement in respect of England and Wales, but in the meantime you may wish to consider the updated rates elsewhere within the UK in respect of any ongoing negotiations.