Ogden 8 – an algorithm to rely upon?

Thu, 24 Sep 2020

This article was originally published in the Summer 2020 issue of the MASS Insight magazine.

Introduction

If a man or woman is injured in a road traffic incident and is claiming damages to reflect their future losses, their working life, their loss of pension, their need for care and services or for future treatment, the Ogden Tables have since 1984 been the first port of call for all legal practitioners to assess the loss.  The tables are a combined wisdom of representatives from professional bodies, representatives from Claimant and insurer interest, actuaries, academics and the government.  They are not legally binding but they are of strong persuasive value.

Ogden 8

A new edition of the Tables has just been published in July 2020 and will be applied to cases going forward.  It is based on mortality projections from 2018 from the Office for National Statistics (ONS).   The previous edition was based on 2008 projections. The tables indicate how much an annual loss has to be multiplied by to obtain a loss to cover a given period.  The information required to use the tables is often the age of the Claimant at trial and the discount rate together with finding the correct table to be assessed.  Table 1 deals with losses which will be incurred on an annual basis for life. It is based on a projected life expectancy.  However the importance of the discount seen in considering the appropriate multiplier for a man aged 25 in assessing losses in Scotland (discount rate -0.75%), England (-0.25%) and Northern Ireland (2.5%).  This leads to the following different multipliers:

Scotland                78.31
England                 66.05
Northern Ireland    30.88

The tables become more complex and further information is required where  future losses of income or pension are considered.

Future loss of income claims 

It is necessary to assess:

  1. Whether the Claimant is disabled;
  2. What the Claimant’s academic qualifications are.

Example

This English Claimant is aged 25 at the date of trial. She has an NVQ Level 3 She was in employment at the date of the incident at a net salary of £25,000 a year.  She was not disabled before the incident.  Following her injuries she is now disabled and has lost her job but found part time employment at a net salary of £10,000.  She is expected to retire at age 68 now, as was the position pre-incident.

  1. Consider Table 12 for loss of earnings to pensions age 68 for females.
  2. Consider discount rate of -0.25%.
  3. Table 12 shows the multiplier is 44.53.
  4. The Claimant had achieved an NVQ Level 5. She was therefore at employment level 2 in Table C. With the Claimant not being disabled before this incident a reduction factor of 0.83 is indicated resulting in a revised multiplier of 44.53 x 0.83 = 36.96.
  5. The Claimant’s expected earnings in the absence of the incident are therefore £924,000 (£25,000 x 36.96).
  6. Allow for mitigation of loss of earnings in respect of post injury residual earnings. The multiplier to 68 remains the same (44.53).
  7. Taking into account the Claimant’s present employment status and that the Claimant is now considered as disabled results in a reduction factor of 0.42. The revised multiplier is therefore 44.53 x 0.42 = 18.70.
  8. The amount of the Claimant’s post incident income is therefore 18.70 x £10,000 = £187,000.
  9. Therefore, the Claimant’s future loss of earnings is £924,000 minus £187,000 = £737,000.

Provisos

1. The Courts can depart from the calculation indicted by the tables because of any facts specific to the case which might include:

  • The type of work the Claimant would have done and is now doing.
  • The Claimant’s previous work record.
  • Health issues the Claimant might have in the future.
  • The degree to which the Claimant can work despite their disability.

As the notes to the tables say at paragraph 92:

  “All departures will be case specific.”

2. It is ultimately a matter for the Judge to assess the financial loss that the Claimant will suffer as a result of the effects of this incident.

Future loss of pension

It is necessary to consider what the pension scheme is.  Details as to how the loss should be quantified are set out  guidance notes C which has some worked examples

How are these tables different from Ogden 7?

(1)Life Expectancy

It is now thought people will not live as long as it was thought they would live in 2008.  Therefore, there has been a reduction in multipliers to reflect this effect upon life expectancy which is greater for women than men.   This mainly effects (as regards percentage deductions) tables which set out a full life multiplier and affect older Claimant’s more.  The examples set out below support the view, expressed in the guidance notes at (9) that for older Claimants the difference resulting can be 8/9%.  For loss of earnings (which does not involve life expectancy) the figures are almost identical.

"It is now thought people will not live as long as it was thought they would live in 2008."

Comparison

Table 1/2
Life Multipliers– at 25, 50 and 75

 

Male

Female

Age

Ogden 7

Ogden 8

Percentage reduction

Ogden 7

Ogden 8

Percentage reduction

25

67.13

66.05

1.65%

71.43

69.32

3%

50

37.30

36.24

2.9%

40.86

39.09

4.4%

75

13.59

12.50

8%

15.45

14.07

9%

 

Tables 29/30
Multiplier for loss of pension at retirement age of 70– at ages 25 to 50

 

Male

Female

Age

Ogden 7

Ogden 8

Percentage reduction

Ogden 7

Ogden 8

Percentage reduction

25

21.37

20.05

6.2%

24.89

22.72

8.7%

50

17.93

16.73

6.7%

21.11

19.26

8.8%

 

Tables 13/14
Loss of income to the age of 70- at ages 25 and 50

 

Male

Female

Age

Ogden 7

Ogden 8

Percentage increase

Ogden 7

Ogden 8

Percentage increase

25

45.76

46.00

0.005%

46.53

46.60

0.001%

50

19.37

19.51

0.007%

19.76

19.83

0.003%

 

(2) There are a substantial amount of additional tables which will be published only on the Government Actuaries Department website in excel format at discount rates of -7.5%, -.25% and 0% which allow for the calculation of multipliers from any age at trial to any future age (up to age 125!).

(3) Within the Ogden tables are a number of new tables which helpfully consider the retirement age of 68 which is when most working people will now retire and also provides for loss of earnings to a retirement age of 80.

(4) The definition of disability has been clarified:  It is not the same as that used in the Equality Act 2010. It introduces a more restrictive test as to who is disabled (see guidance notes 68/69) by applying the Disability Discrimination Act 1995 definition.

(5) Categories of educational achievement have been changed so that they are now categorised in three levels with a comprehensive breakdown within the guidance notes (73) which level applies to each qualification.  They are detailed and easier to apply than the previous tables.

(6)Tables B and D have been reassessed as regards the prospects for men and women who are disabled in finding work.  This is slightly reduced.

 

Male

Female

Age

Ogden 7

GE-A

Ogden 8

Level 2

Ogden 7

GE-A

Ogden 8

Level 2

25

.57

.50

.45

.42

50

.49

.46

.56

.54

(7) There are very substantial guidance notes dealing with issues of employability and in particular, reasons for departure from a strict application of the tables. The tables are keen to suggest that the Courts have been expecting it is easier for disabled people to find work than has in fact been the case and the notes specifically raise concerns about cases such as Connor v. Bradman 2007 EWHC 2789 where a Judge split the difference between pre and post injury reduction factors which the guidance notes (91) indicate “will normally be too great a departure”.  The notes also distinguish between a reduction in income and a reduction in employment prospects stressing that each needs to be considered separately (guidance notes 94). 

(8) There are also additional and very helpful guides as to:

  • Fatal accident calculations – which have changed significantly since the last Odgen Tables following the decision in Knauer v. Ministry of Justice 2016 UKSC 9 which indicated that damages should be assessed at date of trial not death (Section D).
  • Periodic payment claims (Section E). This includes a formula to use when updating periodicals payments for loss of earnings taking into account post injury residual earning capacity in a different role.

“In some cases it may be difficult to determine the scale of the departure (from the Tables) and it may be helpful to consult expert opinion,”

Likely issues

  1. Courts have often found that the Ogden Tables are unduly pessimistic as to the prospects of disabled workers finding work. The prospects of an unskilled, unemployed, disabled 50 year old male worker at the time of trial  working are put at 10% on the Ogden Tables. In many situations the Courts have not accepted this. Will the Courts reconsider their approach?
  2. The Ogden Tables point to the people assessing themselves as disabled increasing to 19% in 2019 compared to 12% in 1998. Billett v. Ministry of Defence 2016 PIQR Q1 is put forward in the guidance notes (69) as being a case in which under the new Ogden Tables the Claimant might not have been found to be disabled.  Will future Courts agree?
  3. If fewer people are to be found to be disabled there will be issues as to what financial compensation and future losses could be awarded. Could this be akin to the level of Smith v. Manchester claim allowed in Billett?
  4. The guidance notes at (92) states:
    Courts have generally been very unkeen to allow such evidence to be admitted. Will this act as an encouragement?
  5. The tables pre-date the problems to the economy as a result of Coronavirus. It seems likely the result of Coronavirus will be to make keeping and finding work, particularly for disabled workers, more difficult.  How should this be factored into the tables?

Conclusion

The additional tables and guidance given in the Ogden Tables are extremely helpful and make Ogden 8 an improved model.  If there are no case specific facts (ie a life multiplier for a 25 year old in good health, a multiplier to retirement age for a 25 year old starting on a career) the tables are highly likely to be followed.   However the more any assessment needs to be case specific (ie a life multiplier for a 50 year old with other health conditions, a multiplier to retirement age for a 50 year old with a poor work record/other health difficulties/uncertainties over their long term job stability), the more Courts are likely to find the tables a starting point rather than binding on the Court’s assessment (especially with regard determination of future employment prospects).  An algorithm to use but not to completely rely upon?

 

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