Victims lose out on cash left in court accounts
Personal injury awards handed out to accident victims or mentally incapacitated children may be languishing in official court accounts that are paying paltry interest.
It's estimated that more than 140,000 people could be heading for a care cash crisis by leaving their money in the Court Funds Office's Special Account.
The cash is awarded to people in order to fund the specialist medical care they will need during their lifetime.
But with the account paying just 0.5 per cent, there's a strong risk that the fund could run out with care costs still to be met.
"The interest rate falls way short of inflation and will not generate the income required for the award to last a lifetime's medical care and support," warned Richard Fullman of Investec's personal injury and Court of Protection team. "But people can make alternative arrangements to improve returns."
Investec calculates that if a £1m award was left in the Special Account and £50,000 a year taken out annually for medical care and support, the portfolio would run out of capital in just 12 years. After just four years the investor would lose a quarter of their award.
"Awards need to be carefully invested in order to cover all of the different costs that an individual will incur over the course of their lifetimes," said Mr Fullman.
He urged those looking after the affairs of people given personal injury awards to look at alternatives to the Court Account.
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