Severely injured people, forced to gamble with their compensation to cover the cost of future support, could face having their damages cut further under Government proposals.
High-value damages payments are subject to a reduction to offset any interest that may be earned over time. Despite the fall in interest rates during the recession, the current “discount rate” has not been reviewed since 2001, which the Association of Personal Injury Lawyers (APIL) warns is costing critically injured people the money they need for their care in the future.
“If a man is paralysed, for example, he is likely to need specialist equipment and therapies for the rest of his life. His damages to pay for these things are very carefully calculated by the courts, but under the current discount rate that money is being reduced too far and there is a very real danger it could run out,” explained APIL’s president Matthew Stockwell.
APIL is concerned that the Government is pre-occupied with changing the legal parameters, which govern how the discount rate is set, for the wrong reasons.
“Some people have been forced to invest their compensation in more risky initiatives in an effort to make sure the money doesn’t run out before they die. Yet the Government has suggested the discount rate should perhaps be increased, to take this practice into account,” added Matthew Stockwell.
“The Government doesn’t seem to understand that people are being forced to take these risks. Critically injured people don’t want to speculate on investments that carry risk and should not have to,” he concluded.
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