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Oggy! Oggy! Oggy! …

The new edition of the Ogden Tables (Ogden 7) was released yesterday (10 October 2011) by the Government Actuary’s Department (GAD) The previous Tables (Ogden 6) were published in March 2007 and contained multipliers based on projected mortality rates derived from the 2004 based population data sets and projections for the UK published in October 2005 by the Office for National Statistics (ONS). These mortality tables are now considerably out of date and Ogden 7 uses the more recent 2008 based population data sets and projections for 2011.

 

The key points (Ogden 6 to Ogden 7) are:

  

·         The good news is that there is no structural change to the layout of the Tables. Table 1 is still multipliers for pecuniary loss for life (males) and Table 28 is still multipliers for pecuniary loss for term certain.

 

  • There are few changes to the text of Ogden 7. The Ogden Working Party (OWP) recognises that changes are necessary to “bolster its usefulness to practitioners” and take into account the effect of other decided cases but “the intention of the (OWP) is to accomplish this re-writing in the next (eighth) Edition which will rely on the further updated mortality projections due to be produced by the ONS later in 2011. It is hoped that the eighth edition will be available in autumn 2012” – see [6] of the Introduction.
  • The use of updated mortality tables results is an increase in life expectancies for both males and females for all ages up to 96 for males and 98 for females.  In some cases the increases are very significant. For example, at age 75 the increase for males is just under 15% and for females it is just over 14%.
  • As a result, except for the very elderly, there are corresponding increases in life multipliers for all ages. At a 2.5% discount rate the increase from Ogden 6 to Ogden 7 for males is just under 2% at age 24, 4% at age 50 and over 12% at age 75. The corresponding figures for females are about 1.5% at age 25, just over 3% at age 50 and just under 12% at age 75.
  • This means that the life multiplier at a 2.5% discount rate for a male aged 50 in Ogden 6 was 21.86 and in Ogden 7 it is 22.69. The corresponding life multipliers for female are 23.37 in Ogden 6 and 24.14 in Ogden 7.
  • Earnings multipliers have not increased as much. For males retiring at age 65 the biggest rise is at age 47 of over 0.6%. For females retiring at age 60 the highest increase is at age 41 of just under 0.3%.
  • There are significant increases in pension multipliers. For a male aged 40 with a loss of pension commencing at age 65 the increase is just under 8.5%. For a female with a loss of pension commencing at age 60 the increase at age 40 is just over 5.5%.
  • The OWP has decided not to include in Ogden 7 tables to reflect different retirement ages because “the multipliers for retirement ages which do not conform strictly with the 5 yearly intervals between 50 and 75 can be calculated with reasonable accuracy by interpolation” – see [10] of the Introduction.
  •  Dr Victoria Wass is now a member of the OWP. At her suggestion the definition of “disabled” has changed. It no longer refers to “a progressive illness or an illness” which has lasted or is expected to last for over a year but to “an illness or a disability which has or is expected to last for over a year or is a progressive illness”. The reference to the Disability Discrimination Act 1995 has also changed to the Equality Act 2010. 
  • The OWP has postponed a decision on the issues arising from Conner v Bradman [2007] EWHC 2789 (QB) and Clarke v Maltby [2010] EWHC 1201 (QB) i.e. the circumstances when it is appropriate to depart from the suggested non-mortality reduction factors. “These issues will be discussed in detail when drafting the eighth Edition and consideration given to whether or not the Explanatory Notes need amendment” – see [18] of the Introduction.
  • For fatal accidents the OWP notes that section 7(1)(d of the Damages (Scotland) Act 2011 provides that in Scotland the multiplier is to be calculated at the date of trial not the date of death unlike in England where the law is still that outlined in Cookson v Knowles [1979] AC 566. The OWP notes that Scottish law is now “the same as our actuarially recommended approach” – see [21] of the Introduction.
  • Finally and most controversially Ogden 7 now includes discount rates ranging from -2% to + 3% presumably to allow for a possible change in the prescribed discount rate as a result of the review currently being undertaken by the Lord Chancellor. This development will be met with dismay by defendants but the OWP argues that the decision by the Court of Appeal in Guernsey in Helmot v Simon [2009-10] GLR 465 in which a discount rates of 0.5% for non-earnings-related losses and -1.5% for earnings-related losses was ordered has “rippled the waters within the English legal establishment even though the decision creates no precedent in England” – see [11] of the Introduction..

 

The changes in life expectancy as a result of the use of updated mortality data and the consequent increase in multipliers in Ogden 7 will clearly result in an immediate upward pressure on damages even before the Lord Chancellor’s review of the discount rate is complete.

Ogden 7 can be downloaded from the GAD website:

http://www.gad.gov.uk/Documents/Other%20Services/Ogden%20Tables/Ogden_Tables_7th_edition.pdf

piCalculator subscribers (www.picalculator.co.uk) will be please to hear that piCalculator is already fully loaded with the new Ogden 7 data. Users will see that the “Edit Client” facility now includes an option (see below) to select and use Ogden 7.

Comments (1) -

  • Marc Clifton

    10/12/2011 11:01:27 AM |

    Great article and summary of the key points.  We have also implemented the changes to our own Ogden Online Calculator within moments of its release.

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