Following the recent announcement by the Lord Chancellor that the Discount Rate would be amended from 2.5% to -0.75%, the Ministry of Justice have yesterday (30 March 2017) launched a consultation.
It is assumed that the discount rate set on 27 February 2017 was set by reference to index linked gilts. Many question the appropriateness of reliance upon index linked gilts as a measure of likely returns in the present day securities market. In an effort to address this point, the consultation seeks views on the following questions:
1. What principles should guide how the rate is set?
2. How often should the rate be set?
3. Who should set the discount rate?
The consultation documents can be accessed on the Ministry of Justice’s website.
The consultation will close at 11.45pm on 11 May 2017.