Government Forced To Consider Compensation Discount Increase

The government may have to rethink plans to increase compensation discount figures. 2.5% is currently discounted from large compensation settlements, under the belief that claimants can invest their money in government backed securities and receive at least this amount in interest and associated payments. The government wants to increase this figure, stating that claimants are willing to take greater risks with the money which means that they have greater potential for return.

Large compensation settlements will typically include provision for long term care, healthcare costs, and loss of earnings. This can mean considerable sums of money being paid to victims of personal injury, criminal injury, and medical negligence among other types of claim. In some instances, a claim may total several hundreds of thousands or even millions of pounds and this will include some allowance for consecutive years after the value is awarded.

A claim discount is applied in large settlements. The current rate of discount is 2.5% and is levied against the total figure under the pretext that the claimant will invest a large portion of the money in government backed securities. Doing so will ensure that the claimant receives the full amount of their compensation package despite having some of it withheld. The government had asked for consultation on the existing plans.

Following a first round of consultation, the government said that it believed claimants were high risk takers and that they would be willing to place their money in investments with higher risks and, therefore, greater potential for larger returns. With greater returns it would have meant that the government would be able to increase the size of the discount applied to the total figure so that less money would be paid to claimants.

However, a second round of consultation has suggested that the government’s suppositions were incorrect and that claimants are, in fact, risk averse. Research conducted by the Ministry of Justice suggested that claimants wanted to minimise the risk that they faced. However, it was noted that there were gaps in the knowledge that the MoJ has at this time and so it is unlikely that a final decision is imminent.

About The Author

Safina Soni is a principal personal injury solicitor at Stocks Legal Manchester, specialising in fatal injuries, criminal injury claims and accident at work claims.

Safina has brought a wealth of experience to Stocks Legal and is a pivotal member of their executive team.

"I am very proud to be a personal injury solicitor as I know that I make a real difference to people who have suffered and continue to have problems as a result of their injuries."

As a market leader in personal injury claims, Safina is really easy to contact. You can call her for FREE on 0800 988 9055 or you can send her a confidential email by clicking here.

Access To Justice General PI News StockslegalOct 14th, 20130 comments