Keoghs Insight


Samantha Ramen

Samantha Ramen


T:07713 393534

Discount Rate: Could we be set for a new discount rate in Northern Ireland?

Client Alerts19/06/2020

The personal injury discount rate in NI is currently 2.5%, but the Department of Justice is consulting on possible changes to the legal framework for setting the rate.

Since 2017, the framework for setting the personal injury discount rate, and indeed the rate that is set, has been a consistent talking point in the claims world, owing to numerous consultations, controversial changes to the rate, and new legislation brought forward within jurisdictions across the UK.

However, until recently, the Northern Ireland Executive has been absent from most of the participation, as the collapse of power sharing arrangements within the Northern Ireland Executive effectively left the NI Department of Justice without a Minister for several years.

This has meant that Northern Ireland hasn’t updated its framework in the ways that England & Wales and Scotland have done since 2017. Instead, they have been utilising the Wells v Wells framework, using this to draw a conclusion that the personal injury discount rate in Northern Ireland should be -1.75% (although this proposal is still under review).

Northern Ireland is the only UK jurisdiction where the discount rate is set via this method, and the new consultation is designed to decide whether this is still the right approach. The consultation was published on Wednesday and will be open for eight weeks (until 14 August 2020) with a summary of responses to be published by the Executive shortly afterwards and proposals for changes taken forward from there.

Is it possible that there will soon be a different discount rate in every jurisdiction of the UK? Below we summarise the current situation in each:

England & Wales

The current rate, which came into effect in August 2019, is -0.25%. The rate is defined in secondary legislation, although courts have the power to consider a different rate of return. It is set by a framework which assumes damages are paid as a lump sum and the claimant has proper financial advice, and the Lord Chancellor sets the rate in accordance with the current financial picture, considering taxation, inflation and investment management costs. A review of the rate is required within five years of each update, meaning that a reviewed rate will be in place no later than 2024.


The current discount rate in Scotland is -0.75%, although courts have the power to consider a different one. The rate considers a 30-year-period of returns, with the deduction to take account of taxation and investment advice. The key difference in Scotland is that assumptions are made about what will make up the investment portfolio.

Northern Ireland

Northern Ireland currently operates under the Wells vs Wells framework, and as such has a rate of 2.5% (albeit there are proposals currently under review with the Government Actuary and Department of Finance that propose a rate of -1.75%).

For further information, please contact Samantha Ramen on the above details.