Ogden 8: Modest Multiplier Reductions

Published 21 July 2020

The much awaited latest version of the Ogden Tables (the 8^th edition) has now been published by the Government Actuary’s Department (GAD).

The changes to the 7^th edition take into account the most recent life expectancy tables published by the Office for National Statistics (ONS), which projected a slight reduction in life expectancy.  The result of that predicted reduction and its impact on multipliers will be a commensurate, modest reduction in future damages awards calculated using those new multipliers.  The older a claimant is, the higher the percentage impact on their damages award will be.

In the introduction to the new edition of the tables, the Chairman of the 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%.”

Beyond the updating of the previously available Ogden Tables, the changes in the 8^th edition include:

• A new section dealing with the indexation of loss of earnings awards provided for within periodical payments orders (PPOs) addressing the application of the suggested reduction factors and how to update for different earnings-based measures of inflation.
• New tables for loss of earnings to a retirement age of 68 and pension losses from the same age.
• New tables for loss of earnings to a retirement age of 80 and pension losses from the same age.
• Multipliers derivable from discount rates of -0.25% and -0.75%, thus ensuring that the applicable rates in England & Wales and Scotland are covered.

The commentary around the indexation of the loss of earnings element of PPO awards is set out within the explanatory notes to the tables.  While acknowledging the preference of some claimants for the clean break provided by a lump sum payment, the notes seek to promote periodical payments for earnings related losses by describing them as “the safest means to track future earnings growth on earnings-based elements of the claim”.

As a result of these changes, it would be wise for defendants to revisit settlement offers made in respect of claims involving future loss awards where the previous edition of the Ogden tables has been used in calculating the amount offered, irrespective of whether such offers have been made by Part 36 or otherwise.  The effect of the changes to multipliers can only accurately be assessed on a case by case basis.  In the majority of cases, the impact will be modest, but there may be some cases where existing offers may need to be withdrawn or changed.

Compensators will no doubt also be looking to review their reserves to reflect the impact of the new multipliers.  It is worth bearing in mind that there will be no impact where the court or the parties depart from an unimpaired life expectancy approach and calculate future losses for life by reference to a bespoke fixed term for life expectancy, derived from a claimant’s individual circumstances. 

From the perspective of defendants and insurers, the 8^th edition changes will be welcomed against the background of disappointing outcomes to the 2019 reviews of the discount rates in both the jurisdiction of England & Wales and that of Scotland.  However, their impact will be modest in the majority of cases.  Moreover, insurers writing cover in the jurisdiction of Northern Ireland will be far more concerned about potential variations to the discount rate in that jurisdiction, where the Department of Justice is consulting over varying the current 2.5% discount rate to -1.75%.  The new 8^th edition of the Ogden Tables does not include multipliers derivable from a -1.75% discount.  However, DAC Beachcroft working in partnership with Verisk has produced an illustrative set of -1.75% multipliers that can be made available on request. 

For more information or advice, please contact one of our experts in our complex injury team.