New Personal Injury Discount Rate in Northern Ireland Expected in Q1 of 2022

In edition 326 of BC Disease News (here), we reported that the personal injury discount in Northern Ireland was decreasing from 2.5% to (-)1.75%, on 31 May 2021.

The personal injury discount rate is a percentage figure used to adjust the value of lump-sum awards of compensation for future financial losses (e.g. loss of earnings) and costs (e.g. future care costs) to account for the amount a personal injury claimant could expect to earn by investing their award. Ideally, application of the discount rate should put the claimant in the same financial position that they would have been in had they not been injured, meeting the 100% compensation principle (i.e. not over-, nor under-compensated).

Attracting criticism, the (-)1.75% rate was established via a methodology that has been replaced in England and Wales and in Scotland.

Essentially, the rate was calculated with reference to expected returns on ‘very low-risk’ investments,[i] whereas discount rates in the rest of the UK are currently calculated with reference to ‘low-risk’ investments.

It had been hoped that the Damages (Return on Investment) Bill (introduced to the Northern Ireland Assembly on 1 March 2021), which creates a new statutory methodology for rate review in line with neighbouring UK jurisdictions, would be enacted by summer.

However, expeditious passage did not prove possible, prolonging the effect of the excessively negative discount rate.

On 7 December, though, the Bill reached the Final Stage, with Royal Assent expected before the end of January 2022.[ii]

Justice Minister, Naomi Long MLA, announced that the legislation would bring an ‘end to uncertainty’

‘The passing of this Bill is a significant step towards providing for a stable discount rate in Northern Ireland that better delivers full compensation for claimants, whilst also ensuring fairness for defendants’.

As soon as the Act is operational, the Government Actuary (no longer the Department of Justice) must review the discount rate. He must complete his review within 90-days. Thereafter, the rate will be reviewed at least every five years.


[i] See the House of Lords, in Wells v Wells [1998] UKHL 27.

[ii] ‘Long welcomes changes to how personal injury discount rate is set’ (7 December 2021 Department of Justice) <> accessed 13 December 2021.