Ogden working party releases 8th Edition of Ogden tables
The 8th edition of the Ogden Tables has now been published. Read more on the changes and what this means for you...
The 8th edition of the Ogden Tables was published on 17 July 2020, which amongst other revisions, brings the Ogden Tables up to date with the most recent Office for National Statistics’ (ONS) mortality projections published in 2019. The 8th edition replaces the 7th edition published in 2011 as the basis for calculating lump sum compensation for personal injury and fatal accident claims.
What has changed in Ogden 8?
The headline point is that life multipliers are now lower for all ages. This is due to the lower actual decreases in mortality projected between 2008 and 2018 and the ONS’ more pessimistic assumptions over the improvement of mortality in their latest projections.
The exact reduction depends on the age of a claimant. Younger claimants see a small reduction of 1% to 2% and older claimants see a reduction of as much as 8% to 9%, with female life multipliers having a greater reduction across the board.
For example, a 73-year-old female’s Ogden 7 life multiplier was 17.35, whereas in Ogden 8 it is 15.75, a 9.22% reduction. A 24-year-old male’s life multiplier reduces from 68.41 to 67.33, a 1.58% reduction.
There are now 36 numeric tables (up from 28), with the welcome addition of earnings and pension multipliers to ages 68 and 80. Old Tables 27 (discount factors for term certain) and 28 (multipliers for pecuniary loss for term certain) are now Tables 35 and 36 respectively.
Tables A to D (contingencies other than mortality) have also been reworked. The previous academic achievement categories of D, GE-A and O have been replaced with Level 3, 2 and 1 respectively and reflect the much wider range of qualifications now available.
In addition, the definition of disabled has been altered. The disability rate in the working population has increased (19% in 2019 compared to 12% in 1998), reflecting the increased reporting of disability rather than an increase in the actual number of such impairments. This has resulted in the Ogden Working Group tightening up the Ogden 8 definition of disabled. In Ogden 7 a claimant had to be classified as disabled under the Equality Act 2010, where as in Ogden 8 a claimant has to be classified as disabled under the more restrictive Disability Discrimination Act 1995.
By way of reminder, this is in addition to the other 2 requirements for disability required under Ogden namely, an illness or disability which is expected to last over a year or is progressive and the effect of the impairment limits either the kind or amount of paid work that the claimant can do. I strongly urge you to read Section B (paragraph 54 onwards) in its entirety for the full explanation of the updated test.
Elsewhere there is a new Section C which deals with pension loss and when to use a Table A to D adjustment, an updated Section D dealing with fatal accidents following Knauer v Ministry of Justice  UKSC 9 and a new Section E dealing with indexation of PPOs. There are also new reworked examples throughout.
Finally, there are also new additional tables published separately in Microsoft Excel formal to allow the calculation of multipliers from any age at trial to any future age up to 125. For those of you that use PI Calculator to do this for you, you will be pleased to know that Ogden 8 has already been incorporated but you will need to select Ogden 8 rather than Ogden 7 for your dataset.
What does this mean for me?
The most important point is that a current Part 36 offer based on Ogden 7 may now no longer be appropriate given that the life multipliers are all lower. Claimants may seek to accept offers and insurers may seek to reduce or withdraw them before they can be accepted.
The changes have limited or no effect on earnings multipliers but the modest adjustments to Tables A to D may well be worth a look if you have a claim with a high future loss multiplicand.
The tightening up of the definition of disabled may also help to reduce the number of cases where the alleged disability is not that severe, but a disabled multiplier was technically the correct method of calculating future loss of earnings. More guidance has also been provided as to when to depart from the Ogden methodology.
We recommend you review all of your offers in light of the changes, but particularly if you have a female claimant with a life-long care need as that claim could now be worth significantly less.