Change in the PI Discount Rate – What does it mean for deputies managing interim payment and settlement funds?

Posted: 27th January 2025
by Samantha Hind

What is the discount rate?

The PI discount rate is a figure assessed by the Lord Chancellor whereby claimants have their settlements ‘discounted’ to take into consideration that they are receiving the money before they need to spend it and the potential gain that they can make by investing the lump sum element of settlements.

For some years now, the discount rate has been a negative figure to reflect market conditions, inflation rates and the costs in fees for investment advice and investment platforms/wrappers etc.

The Lord Chancellor announced that the rate will be increasing to 0.5% (effective from 11th  January 2025).

For more information on the Personal Injury Discount Rate – visit Personal Injury Discount Rate – GOV.UK

What does this mean for claimants and settlement figures?

In simple terms, settlement figures will be reduced to reflect a 0.5% deduction for investment gain.

A claim settled on 10 January 2025 will be worth more than a claim settled on 11 January 2025.

ASHE linked periodical payments will still reflect the national increases in carer’s wages (and other heads of loss that are received as a periodical payment will still be linked to indices such as RPI/ASHE) so litigation solicitors are likely to be moving towards trying to claim more heads of loss as periodical payments, rather than as a lump sum.

This is only likely to be safe for claimants where the Defendant insurer can be relied upon for the annual payment throughout the claimants’ life expectancy (such as claims against the NHS). Claimants making claims against less reliable parties will be impacted more because those claimants are more likely to receive their compensation as a lump sum.

How can deputies and litigators work together to help claimants recover as much of their losses as possible?

1 – The obvious starting point, the deputy should keep a detailed log of expenditure and supporting receipts and invoices.

2- There should be a discussion with the claimant and those around the claimant, about the type of expenditure that is recoverable and evidence that will be required to ensure that there is no recoverable expenditure that is being paid for but has not been included in the schedule of loss.

3 – The deputy and litigation solicitor should work with the claimant’s MDT team to ensure that their reports and case management plans detail the efforts to recruit and why a higher rate of pay has been offered to recruit and retain staff in a care package (i.e. job adverts put out, the number of applications, the number of suitable applicants and the number of candidates successful at interview).

4 – Same as above, re property. It is helpful for the claimant/those working with the claimant to keep a ‘portfolio’ of properties on the market within the radius of the search, to assess suitability, price marketed for, price the properties sold for etc.

5 – I would always advise that the deputy be allowed to comment on the costings provided by the experts in their reports as the deputy has a working knowledge of the claimant’s day-to-day expenditure and how and why the spending was decided to be in the claimant’s best interests, to enable as much of the interim payment expenditure to be included in the schedule of loss as possible.

These reports can (and should) be saved in a separate litigation support file and marked as privileged.

6 – In some, complex cases where there have been significant issues such as ‘bumps in the road’ with property adaptations/difficult care packages/DOLS and welfare issues, the litigation solicitor may find it helpful to have a statement of fact from the deputy dealing with these issues (and to help the deputyship expert when independently advising on deputyship costs). In some of the more complex cases that have been ongoing for several years, the litigation solicitor may find it helpful for the deputy to attend settlement meetings.

7 – It is often helpful for the deputy and litigation solicitor to have a more detailed discussion before any reverse indemnities or Peter’s undertakings re-applyin for public funding/repaying public funding are agreed.

The rules around public funding for care and support are complex and too detailed to discuss here but if Claimants or Litigation solicitors would like to, we are always happy to talk through these issues in more depth.

8 – Whilst it is important to remember that acting as a deputy and making best interests’ decisions in accordance with the MCA is distinct from providing litigation support to the litigation solicitor in support of P’s claim, we still working together to reach the best outcome possible for the claimant.