Future loss of earnings

Last updated 20 June 2026 · By Mustafa Bilgic

Past loss vs future loss

Lost earnings split into two parts. Past loss covers the wages you have already missed between the accident and settlement — a known, provable figure (see loss of earnings). Future loss covers income you will lose after settlement because the injury has lasting effects: you cannot return to your old job, must work reduced hours, or have lost the capacity to earn as you did. Because it predicts the future, it needs a structured method rather than a simple sum.

The multiplier/multiplicand method

The standard approach multiplies two figures:

• Multiplicand — your annual net loss: the difference between what you would have earned but for the injury and what you can now earn, after tax.
• Multiplier — a factor from the Ogden Tables reflecting the number of years the loss will run (for example, to retirement), discounted for early receipt and adjusted for life expectancy and "contingencies other than mortality" (the ordinary chances of illness, unemployment and so on).

Illustrative only. Real multipliers depend on age, sex, retirement age, the discount rate set by the Lord Chancellor, and Ogden contingency factors.

The discount rate matters

Because a lump sum is paid now for a loss spread over future years, it is adjusted by a discount rate set by the Lord Chancellor (it can be negative, which increases awards). Small changes to this rate move large future-loss figures significantly, which is why these calculations are done with current official tables and, in serious cases, with input from forensic accountants and employment experts.

Loss of earning capacity (Smith v Manchester)

Sometimes the future is too uncertain for a year-by-year calculation — for example, you have returned to your job but, because of the injury, would be at a disadvantage on the open labour market if you lost it. In that situation a court may award a lump sum for loss of earning capacity (a "Smith v Manchester" award), typically valued at around several months' to a couple of years' net earnings depending on the risk.

Future loss is part of your special damages. For how it fits into the whole award, see how compensation is calculated.

Self-employed and variable earners

Future loss is harder to pin down when income is irregular — for the self-employed, those on commission, or people whose careers were still developing. Here the multiplicand is built from historical accounts, tax returns and industry evidence, often with input from a forensic accountant, to establish what the claimant would realistically have earned. Lost business profits, lost contracts and the cost of hiring replacement labour can all feature. The more uncertain the picture, the more important robust documentary evidence becomes.

Pension loss is part of the picture too

An injury that ends or curtails a career does not only cost wages — it can cost pension. Lost employer pension contributions and reduced retirement benefits are a recognised head of future loss, calculated using actuarial evidence and the Ogden approach. For a younger claimant in a good pension scheme, this can add a substantial sum on top of the lost-earnings figure. It sits alongside the other future losses within your special damages, and the whole award is assembled as shown in how compensation is calculated.

Lump sum or periodical payments?

For very large future losses — particularly lifelong care and earnings — the court can order a periodical payments order (PPO) instead of, or alongside, a single lump sum. A PPO pays the claimant an index-linked amount every year for as long as it is needed, which removes the risk that a lump sum is invested badly or runs out, and sidesteps the uncertainty of predicting life expectancy. The choice between a lump sum and periodical payments is a major decision in catastrophic-injury claims, weighing flexibility and control against long-term security.

Frequently asked questions

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