Personal Injury Discount Rate to change in January 2025
What is the Personal Injury Discount Rate (PIDR)?
In successful claims for damages for personal injury, the damages award should put the claimant in the position they would have been in had the injury not occurred. Thus, claimants with serious and long-term injuries receive compensation for anticipated future loss of earnings, care and accommodation costs, for example. These awards are typically paid to the claimant in a lump sum which may not be spent for many years and which may be invested. In order to ensure that a claimant is not over or under compensated, when calculating lump sum awards in such cases, the court applies the PIDR to take into consideration the potential return on investment of the lump sum.
The PIDR is prescribed by the Lord Chancellor in England and Wales under the Damages Act 1996.
PIDR change
On 2 December 2024, the Lord Chancellor announced that the PIDR in England and Wales will be increased from -0.25% to +0.5% with effect from 11 January 2025[1]. The new rate reflects the current economic climate and available investment returns.
What does this mean for Defendants?
The effect of this change is advantageous for Defendants – the Lord Chancellor’s Impact Assessment predicts a £350m per annum reduction in damages (a £200m saving in NHS claims and a £150m saving for insurers is estimated). It is assumed that this will enable public funds to be redirected to frontline services in the NHS and lower insurance premiums.
Defendants are advised to delay settling claims until after the new rate becomes effective or agree settlements only on the basis of the new rate. Any counter schedules should be updated to reflect the rate change. Defendants may also wish to consider withdrawing Part 36 offers made on the basis of the -0.25% rate.
If you require advice and assistance with employer and public liability claims, please contact Donna Makin.