8th Edition of the Ogden Tables released
On 17th July 2020, the Government Actuary’s Department released the 8th Edition of the Ogden Tables and explanatory notes, significantly revising the existing data and aiming to simplify the methodology for calculating future losses in personal injury and clinical negligence claims.
In the first update for nine years, the Ogden Working Party, which includes Crown Office Chambers’ Andrew Smith KC, has assisted the Government Actuary’s Department in configuring and providing the explanatory notes for the 8th Edition of the Tables. The Tables are named after a former member of Crown Office Chambers, Sir Michael Ogden KC, who set up and chaired the first working party.
The Introduction to the new edition points out that since the 7th Edition was published, there have been three new prime ministers; two changes to the discount rate in England and Wales, a Brexit referendum and now a global pandemic.
What has provided the main impetus for a new edition, though, is the publication in late 2019 by the Office for National Statistics of the National Life Statistics for 2016-2018. These show that improvement in life expectancy is slower than was anticipated in the 2008 data underpinning the 7th Edition, and multipliers in the new Tables are therefore generally lower than before, especially for losses after retirement age.
There are now 36 tables in the new edition, compared to 28 previously. The additional tables are for earnings multipliers to a retirement age of 68, reflecting increases in the state pension age in the intervening years and saving practitioners the trouble of carrying out tedious extrapolations between the tables for ages 65 and 70; and earnings multipliers up to the age of 80 instead of the previous ceiling of 75. Insurers can now expect claimants to plead long-tail loss of earnings claims, for young claimants in particular, well past the age of 70.
Additional Tables (in effect ready reckoners) are not included in the main tables but are published on the Government Actuary’s Department website to assist practitioners.
The changes will inevitably have the greatest impact on catastrophic claims.
Among revisions to the Explanatory Notes which will have immediate impact on practitioners, there is enhanced guidance on the impact of disability on employment; a reclassification of the categories of educational attainment used in Tables A to D (reduction factors for contingencies other than mortality to be applied to earnings multipliers); emphasis on the distinction to be drawn between the wage effect and employment effect of disability; and disapproval expressed by the working party of the persisting practice of splitting reduction factors in cases of moderate impairment as in the cases, for instance, of Conner v Bradman [2007] EWHC 2789 and Leesmith v Evans [2008] EWHC 134. It remains to be seen whether judges will follow suit.
There is new guidance on the calculation of pension claims, particularly reflecting the Auto-enrolment changes and the increase in defined contribution pension schemes; and on the calculation of fatal accident claims.
We provide four illustrations of the variable impact of the new life data on multipliers, all at a discount rate of -0.25%:
Illustration 1: Life multiplier for a woman aged 20
7th edition using Table 2 method 77.94
7th Edition using Table 28 method 76.56
8th Edition using Table 2 method 75.75
8th Edition using new Table 36 method:- 75.52
Illustration 2:- Life multiplier for man aged 70
7th edition using Table 1 method 17.81
7th Edition using Table 28 method 17.4
8th Edition using Table 1 method 16.48
8th Edition using new Table 36 method:- 16.39
Illustration 3:- Pension multiplier for woman aged 40 retiring at 70
7th Edition 22.47
8th Edition 20.51
Illustration 4:- Undiscounted earnings multiplier for man aged 25 retiring at 70
7th Edition 45.76
8th Edition 46.00
Members of Chambers will be happy to assist solicitors and insurers in advising on the new edition, and revising current schedules, counterschedules and valuations.
