In personal injury litigation, discount tables are used to determine the lump sum value of a future loss of earnings.
There are two discounts tables generally used:
- Weekly Multiplier – the present value of $1 per week for n number of years discounted at a discount rate (i).
- Deferred Multiplier – the present value of $1 received in n years discounted at discount rate (i).
So how do we use the multipliers.
Example 1 – Use of Weekly Multiplier
The plaintiff is deemed to suffer a loss of earning capacity of $500 per week for 20 years. The loss is calculated as follows:
$500 x 666.4 (5% weekly multiplier for 20 years) = $333,200.
Example 2 – Use of Deferred Multiplier
The plaintiff will suffer a loss of $100,000 in 10 years time. The loss is calculated as follows:
$100,000 x 0.614 (5% deferred multiplier for 10 years) = $61,400.
Example 3 – Combined Weekly and Deferred
The plaintiff will suffer a loss of $500 per week from age 45 in 10 years time to age 65.
$500 x 0.614 (5% deferred multiplier for 10 years) x 666.4 (5% weekly multiplier for 20 years) = $205,585
We have a free Discount Multiple calculator at http://www.dolmanbateman.com.au/online-tools/discount-tables/.
Discount Rates by Legislation
The discount rates used are dependent upon the relevant legislation. The current discount rates for NSW and Victoria are:
|NSW – Motor Vehicle Accidents Compensation Act 1999||s.127||5%|
|NSW Civil Liability Act 2002||s.14||5%|
|NSW Workers Compensation Act 1987||s.151J||5%|
|VIC Transport Accident Act 1986||s.173||6%|
|VIC Wrongs Act 1958||s.28I||5%|
|VIC Accident Compensation Act 1985||s.134AB||6%|