This release presents information about the investment choices of insurance companies, self-administered pension funds, investment trusts, unit trusts and property unit trusts. Reported in this release are quarterly net investment data arising from financial transactions (investments) made by these institutional groups. Also included are quarterly balance sheet data for short-term assets and liabilities, along with quarterly income and expenditure data for insurance companies and self-administered pension funds. All data are reported at current prices (effects of price changes included).
Every Q3 release contains annual balance sheet data for all the institutional groups; providing information on the market value of assets and liabilities. Annual income and expenditure data for insurance companies are also reported at this time.
A question often asked of the MQ5 release is ‘why does it only cover certain institutional groups?’ The answer is that these institutions control a substantial level of assets (over £3 trillion) and engage in significant volumes of investment activity to fund their operations. An understanding of their investments and assets is important in order to monitor the stability of the financial sector and is a key contribution to the UK National Accounts.
Over the next few years, changes to surveys covering the financial sector will be necessary to ensure ONS becomes compliant with the revised European System of Accounts 2010 (ESA10). Once the changes have been made and ‘bedded in’, ONS will consider expanding the MQ5 release to cover other parts of the financial sector, such as securities dealers and businesses engaged in the provision of financial services.
ONS makes every effort to provide informative commentary on the data in this release. As part of the quality assurance process, individual businesses are contacted in an attempt to capture reasons for extreme period on period data movements. It can prove difficult to elicit detailed reasons from some businesses to help inform the commentary. Frequently, reasons given for data movements refer to a ‘change in investment strategy’ or a ‘fund manager’s decision’. Consequently, it is not possible for all data movements to be fully explained.
ONS are aware that a number of users make use of these data for modelling or forecasting purposes. In doing so, careful attention should be paid to the revisions policy (50.7 Kb Pdf) for this release. Comparing the first published estimates of total net investment with the equivalent estimates published three years later, the average quarterly revision (without regard to sign) is £5.7 billion.
The estimate of total net investment for Q2 2013 (last quarter) has been revised downwards by £8 billion from £35 billion to £27 billion (see background note 6 for further information).
glossary (211.8 Kb Pdf)
is available to assist users with their understanding of the terms used in this release.
We are constantly aiming to improve this release and its associated commentary. We would welcome any feedback you might have, and would be particularly interested in knowing how you make use of these data to inform your work. Please contact us via email: Financial.Inquiries@ons.gsi.gov.uk or telephone David Matthews on +44 (0)1633 456756.
The total assets of the businesses covered by this release (insurance companies, pension funds and trusts) were valued at £3,284 billion at the end of 2012, the latest period for which annual results are available. During 2012, these businesses acquired £1,581 billion and disposed of £1,518 billion longer-term financial instruments with a combined value of £3,099 billion. Net investment is the difference between these substantial levels of acquisitions and disposals, as well as changes in holdings of short-term assets, and can be volatile. Table 1 displays net investment data by asset type.
Net investment is estimated at £31 billion in Q3 2013 (Figure 1), the highest recorded quarterly level of net investment since Q2 2009.
Total net investment varies across the quarters of a calendar year and so an increase or decrease in investment from one quarter to the next is not necessarily an indicator of improved or worsening economic activity – these estimates are more likely to reflect varying investment strategies. In terms of context, the five year quarterly average for this series is net investment of approximately £14 billion. The highest ever quarterly estimate of net investment was £43 billion in Q3 2007.
For 2012 as a whole, net investment reported by the institutions covered by this release is estimated at £56 billion, compared with £24 billion and £68 billion for 2011 and 2010 respectively.
Short-term assets investment can be affected by the level of the net inflows of funds into the businesses concerned (premiums or contributions, for example) and by the relative attractiveness of other investments, both in terms of their potential returns and in their perceived risk.
In Q3 2013 there was net investment of £11 billion in short-term assets (those maturing within one year of their originating date), following a low level of net investment of £2 billion last quarter (Figure 2). The total level of net investment in short-term assets for the year to date (£25 billion) currently exceeds the equivalent year to date estimates for each of the past five years.
The strong investment in short-term assets this year may reflect shifts in the balance of perceived risks among the surveyed institutional groups. Several global equity indices (including the FTSE) have increased strongly during 2013, reflecting growing evidence of an economic recovery in the US and the UK. These positive developments were balanced earlier in the year against a reduction in the UK’s credit rating by Moody’s and by a sense of renewed financial crisis in the Euro-zone emanating from Cyprus. In light of these developments, a number of businesses reported that they were continuing to invest in short-term assets as they were “choosing to favour liquidity at this point in time”. Relatively liquid short-term assets are particularly attractive during periods of uncertainty, as they allow businesses to change their investment strategies as events unfold.
Since Q1 2011 there have only been two quarters of net disinvestment (Q3 2011 and Q2 2012) in short-term assets. This contrasts with the period Q3 2008 to Q4 2010 (inclusive), when 6 of the 10 quarters showed net disinvestment. This longer-term comparison highlights how institutions, taking account of the prevailing economic climate, have chosen to restructure their investment portfolios. The five year quarterly average for this series is net investment of £1 billion.
Gilts are fixed income or index-linked bonds issued by the UK government. On the primary gilt market, the purchaser of a gilt lends the government money in return for regular interest payments and the promise that the nominal value of the gilt will be repaid (redeemed) on a specified future date. These assets may then be bought and sold by investors in the secondary market. Gilts are very liquid assets which offer virtually risk-free returns. In recent times, the market for gilts has been significantly influenced by the Bank of England’s Quantitative Easing (QE) programme. Approximately £375 billion of gilts have been bought by the Bank under QE since the start of the programme in 2009.
The institutions covered by this release reported net investment in gilts in Q3 2013 of £7 billion (Figure 3), continuing a period of net investment from last quarter (£8 billion). So far in 2013, net investment in gilts is estimated to be £20 billion. In 2012 as a whole, institutions reported net disinvestment in gilts of £10 billion. This recent reversal in favour of investment in gilts may reflect a change of investment strategy among some market participants. The net investment data from Q4 2012 onwards would seem to suggest that investors are switching back to gilts, possibly in an attempt to avoid the volatility of equity markets.
It will be interesting to see if this trend continues or whether the institutions covered by this release start to disinvest in gilts moving forward. As it stands the institutions seem to be bucking market expectations. For example, on 28 August 2013, the Financial Times reported that “UK long-term borrowing costs rose to fresh two-year highs...amid growing worries among bond investors that the gilts bull run, one of the longest in the market place, had finally come to an end”.
Investment trends in gilts can best be explained by reviewing the role they play in financial markets. Gilts are attractive investments when interest rates are high and are likely to fall. If interest rates fall the price of the gilt rises and may therefore be sold at a profit. Conversely, if interest rates are low, as they are at present and have been since early 2009, the price of gilts is high and a loss might be anticipated if the stock is held to redemption. These characteristics, coupled with the completion of the Bank of England’s most recent asset purchase programme, helps to explain the longer term profile of net investment in gilts.
The latest survey of these businesses’ balance sheets, for the end of 2012, showed that for only the third time, the value of overseas ordinary shares held by these institutions exceeded the value of UK ordinary shares. This is a recent trend, which was seen for the first time in 2010. It would further appear that this trend has continued into 2013 (though we would need data from the annual balance sheet surveys to be sure). This change in strategy over the past three years marks a key shift and would seem to indicate that the institutions covered by this release have sought higher returns on their investments in overseas markets in preference to investing in UK securities.
In Q3 2013 there was net disinvestment (£7 billion) in UK corporate securities (Figure 4). This follows small scale net investment (£1 billion) during Q2 2013 and net disinvestment of £5 billion during Q1 2013. In 2013 as a whole, there has been net disinvestment of £11 billion in UK corporate securities. This is likely to reflect either the reallocation of funds towards short-term assets as part of a wider change in investment strategy, or the continued favouring of overseas securities.
As reported last quarter, there was disinvestment in overseas securities in Q1 2013 for the first time since Q4 2008. It would appear that this was a single quarterly period of net disinvestment, as hypothesised at the time, rather than the start of a longer-term trend of disinvestment. In Q3 2013 the institutions covered by this release reported net investment in overseas securities of £12 billion, following a similar level of net investment (£10 billion) in Q2 2013 (Figure 5).
The category ‘other assets’ covers UK and overseas investment, and includes: British government securities denominated in foreign currency; local authority and public corporation securities; loans; mutual fund investments; fixed assets; investment in insurance managed funds, insurance policies and annuities; direct investment and other assets not elsewhere classified.
Investment in other assets has been positive since Q3 2003. In the third quarter of 2013, there was net investment of £7 billion (Figure 6). This level of net investment is in line with the five year average for this quarterly series (also £7 billion), but lower than the high estimates returned for Q4 2009, Q3 2010 and Q4 2010 (£14 billion, £14 billion and £12 billion respectively).
|Total||Short-term assets||British government sterling securities||UK corporate securities||Overseas securities||Other assets|
Net investment data for each of the institutional groups covered by this release are displayed in Table 2.
These are companies which undertake life assurance, pensions and critical illness business. Such companies provide either protection in the form of life assurance or critical illness policies or investment, in the form of pension provision.
Long-term insurance companies showed net investment of £8 billion in the third quarter of 2013 (Figure 7). This is the second consecutive quarter of net investment.
Of more significance, investment is now confirmed to have occurred in three of the four quarters of 2012 and for 2012 as a whole. This marks a return to investment for this institutional group following disinvestment in 2011. The net disinvestment estimate for 2011 (£4 billion) was the first time that disinvestment had been recorded for this series which dates back to 1963.
These are companies which undertake other types of insurance such as motor, home and travel. This type of insurance is usually over a shorter period, more commonly 12 months.
General insurance companies are estimated to have shown a small level of net investment in Q3 2013 of £1 billion (Figure 8). This level of net investment is in line with the six year quarterly average for this series (£1 billion). The largest single quarterly estimate over the past six years was in Q1 2010, when general insurance companies reported net disinvestment of £6 billion, which was driven by the disposal of gilts and is likely to be a direct consequence of the Bank of England’s Quantitative Easing (QE) programme. As explained by the BBC, “under QE a central bank purchases government bonds from private sector companies or institutions, typically insurance companies, pension funds and high street banks. This increased demand for the government bonds pushes up their value, thereby making them more expensive to buy, and so they become a less attractive investment”.
These are funds established by employers to facilitate and organise the investment of employees’ retirement funds.
Self-administered pension funds showed net investment in Q3 2013 of £17 billion (Figure 9). This is a quarterly record for this series, which goes back to 1983.
Of particular note, self-administered pension funds reported high levels of net investment into gilts in Q3 2013 of £8 billion. Commenting on a survey of European pension funds undertaken by Mercer, the Financial Times reported on 19 May 2013 that “pension funds have been slowly switching back to bonds in an attempt to beat the volatility of equity markets and receive guaranteed income streams to meet pension payments”. It would appear that this trend has continued.
Investment trusts acquire financial assets with money subscribed by shareholders or borrowed in the form of loan capital. Investment trusts are not trusts in the legal sense, but are limited companies with two special characteristics: their assets consist of securities (mainly ordinary shares) and they are debarred by their articles of association from distributing capital gains as dividends. Shares of investment trusts are traded on the Stock Exchange and increasingly can be bought direct from the company.
The trend in the estimates for investment trusts continued broadly flat as it has been since the beginning of 2008 (Table 2).
Unit trusts include open-ended investment companies but they do not cover other unitised collective investment schemes or those based offshore. Unit trusts are set up under trust deeds, the trustee usually being a bank or insurance company. The funds in the trusts are managed not by the trustees, but by independent management companies. Units representing a share in the trusts’ assets can be bought from the managers or resold to them at any time.
Property unit trusts are not allowed to promote themselves to the general public and participation is generally restricted to pension funds and charities. Property unit trusts invest predominantly in freehold or leasehold commercial property yet may hold a small proportion of their investments in the securities of property companies.
Unit trusts and property unit trusts continued to invest in the third quarter of 2013, their 23rd successive quarter of net investment (Figure 10). The level of net investment by unit trusts and property unit trusts in Q3 2013 (£5 billion) is markedly lower than estimates for this institutional group since Q1 2012 and the lowest recorded estimate of net investment for this series since Q4 2008.
The full year estimate for 2012 is the highest single year estimate of net investment (£53 billion) for this institutional group and the highest for any institutional group ever recorded. To place this estimate in context, the fourth highest annual figure of £47 billion was also reported by unit trusts and property unit trusts in 2009. The second and third highest annual estimates of £53 billion and £47 billion were reported by long-term insurance companies in 1999 and 2005 respectively.
In support of the high estimate for 2012 for investments by unit and property trusts are statistics released by the Investment Management Association in its annual 2012 press release. It reported that funds under management reached a record level of £658 billion by the end of 2012, an increase of £82 billion since the end of 2011.
|Long-term insurance companies||General insurance companies||Self-administered pension funds||Investment trusts||Unit trusts and property unit trusts||Consolidation adjustment1|
Rather than provide commentary on total income and expenditure for the institutional groups, it is considered more beneficial to users, based on their feedback, if commentary concentrates on the main components. For insurance companies, premiums and claims are the focus, while contributions (net) and payments are the focus for self-administered pension funds (Table 3). It should be noted that no income and expenditure data are currently collected for the trusts institutional group.
Long-term insurance premiums, at £28 billion in the third quarter of 2013 (Figure 11), were at a similar level to all quarters of the past four years, and in line with the five year quarterly average of £28 billion.
In 2006 and 2007 the value of premiums exceeded the value of claims. This trend has been reversed since and has continued into 2013. In each of the years 2008 to 2010, the value of claims was around 23% greater than the value of premiums. In 2011 and 2012, the value of claims was around 30% greater. In Q3 2013, claims (£40 billion) were 41% greater than the value of premiums (£28 billion).
For general insurance, premiums (£9 billion) were 57% greater than the value of claims (£6 billion) in Q3 2013 (Figure 12). These series have remained relatively unchanged for the past six years.
Contributions (net) to self-administered pension funds for the third quarter of 2013 (£11 billion) were broadly in line with contributions for the third quarters of 2012 and 2011 (£10 billion and £9 billion respectively).
The Q1 2013 estimate of £16 billion is further evidence that there would seem to be a pattern of behaviour for funds to make one-off payments to reduce the deficits in their funds in Q1 and Q4 of a given year. This leads to a tendency for net contributions figures in the first and fourth quarters to be higher than those for the other quarters of the year (Figure 13). A possible explanation for this pattern is that companies, while compiling their end-of-year accounts, are better placed to determine by how much they are able to reduce the gap between the assets and liabilities of their pension funds.
|Long-term insurance||General insurance||Self-administered pension funds|
At the end of 2012, the total assets of insurance companies, pension funds and trusts were valued at £3,284 billion. This compares with £3,010 billion at the end of 2011 (Figure 14). This rise of 9% reflects both the revaluation of assets held through the year and the balance between the sales of some assets and the purchase of others (net investment or transactions).
The value of assets rose for all five asset types in 2012 compared with 2011 (Figure 15). Short-term assets increased by 8%, the value of British government sterling securities (gilts) rose by 3%, UK corporate securities by 7%, overseas securities by 14% and other assets by 10%.
Analysing patterns of investment and the final value of different asset types during 2012 highlights some of the defining features of financial markets during this period. Despite disinvestment in gilts, the value of holdings increased by approximately 3% during 2012. This reflects the impact of several factors, including the Bank of England’s programme of Quantitative Easing (QE) and the indirect effects of the Euro-zone sovereign debt crisis. The higher demand for gilts appears to have reduced their yield, with a corresponding positive effect on the price and value of gilt holdings.
Similarly, the institutions covered by this release disinvested £10 billion in UK corporate securities in 2012, but the value of their holdings increased by 7%. This may reflect the increase in UK corporate share prices through 2012 as global economies began to recover from the financial crisis that affected worldwide markets.
|Total||Short-term assets||British government sterling securities||UK corporate securities||Overseas securities||Other assets|
For only the third time since the series began in 1964, the value of overseas ordinary shares held by these institutions in 2012 exceeded the value of UK ordinary shares (Table 5). As recently as 2001, the value of UK ordinary shares held was more than double the value of overseas ordinary shares, but since then the value of holdings of UK ordinary shares has reduced by nearly a third in current price terms, while holdings of overseas ordinary shares have grown sharply in value (by approximately 80%).
|UK securities||Overseas securities|
|Government sterling securities||Ordinary shares||Other1||Government securities||Ordinary shares||Other1|
In 2012, mutual funds and other assets comprised 81% of the other assets total, which is in line with the 2011 estimate (Table 6). In 2012, UK loans made up 5% of the other assets total.
|UK loans||UK land, buildings and new construction||Mutual funds and other assets1|
This release is compiled using data from quarterly and annual surveys. The annual surveys provide a fuller view of financial activity by these institutions than can be obtained from the quarterly surveys, which sometimes have to be estimated by the businesses that respond. As a consequence there are revisions to the published data for the year, including net investment. In the years 2001 to 2007 (that is, before the financial crisis) those net investment revisions, irrespective of sign, averaged approximately £8 billion. In the years 2008 to 2012 (when markets have been more fluid), the annual revisions have averaged approximately £14 billion.
For 2012, total net investment (difference between acquisitions and disposals of longer-term financial instruments, as well as changes in holdings of short-term assets) by these institutions is estimated to be £56 billion. This estimate is approximately £12 billion less than before the data from the annual surveys were available. This revision is due to the result of new information being available from a considerable number of businesses, many of which (particularly in the pensions sector) now take the view that their net investment during the year was at a lower level than their first estimate. It is important to note that many businesses forecast their first estimates. This further helps to explain the sizeable discrepancy between the two estimates, especially if financial markets, which have been hard to predict over the past few years, do not perform in line with these businesses expectations.
The largest single revision, by asset type, was for other assets, which has been revised downwards by £6 billion (31%) as a consequence of this process.
Both acquisitions and disposals of longer-term financial instruments are now seen as having been at lower levels than first estimated. The revision for acquisitions by all businesses in the institutional groups covered by this release was around 3% and disposals are now also seen as being approximately 3% lower than before. The difference between the two is now approximately £7 billion less than previously estimated.
Active in both life insurance and non-life (general) insurance, they also conduct pension business on behalf of companies and individuals.
Long-term business (mainly life insurance and pensions) has an emphasis on the spreading of risks over time, whereas general business (mainly house, motor and travel insurance) is largely concerned with the spreading of risks between persons and organisations.
Besides consisting largely of life insurance, long-term business also includes occupational and individual pension business. Pension business includes both insured funds and insurance managed funds. Insured funds belong to pension schemes where the schemes’ trustees hold, as a sole asset, an insurance policy contract or an annuity contract. All the schemes’ assets are held in one insurance company and have a guaranteed level of return.
The figures for long-term funds include items relating to shareholders' funds in respect of pure life companies. For other companies these items are consolidated into the figures for general funds.
Self-administered pension funds
The data in this release relate to the self-administered pension and superannuation funds of the private sector and to the funded, self-administered schemes of local authorities and employees previously employed in the nationalised industries.
Insurance managed funds are included in the self-administered pension funds statistics. The main superannuation arrangements in central government are unfunded and these are excluded from the statistics. Fully insured funds are also excluded but their activity is included in figures for insurance companies' long-term business.
A self-administered pension scheme is defined as an occupational pension scheme with units invested in one or more managed schemes or unit trusts. The trustees of these types of schemes can employ either an in-house fund manager to make the day-to-day investment decisions or they can opt to use an external manager to manage the investment.
The figures cover investment trusts recognised as such by HM Revenue & Customs for tax purposes and some unrecognised trusts. Investment trusts companies acquire financial assets with money subscribed by shareholders or borrowed in the form of loan capital. They are not trusts in the legal sense, but are limited companies with two special characteristics: their assets consist of securities (mainly ordinary shares) and they are debarred by their articles of association from distributing capital gains as dividends. Shares of investment trusts are traded on the Stock Exchange and increasingly can be bought direct from the company.
The data covers unit trusts authorised by the Financial Conduct Authority under the terms of the Financial Services and Markets Act 2000. The statistics include open-ended investment companies but they do not cover other unitised collective investment schemes (for example unauthorised funds run on unit trust lines by, for example, securities firms and merchant banks, designed primarily for the use of institutional investors) or those based offshore (Channel Islands, Bermuda etc.) or in other EU member states. Unit trusts are set up under trust deeds, the trustee usually being a bank or insurance company. The funds in the trusts are managed not by the trustees, but by independent management companies. Units representing a share in the trusts’ assets can be bought from the managers or resold to them at any time.
Property unit trusts
The statistics aim to cover all UK property unit trusts authorised under the terms of the Financial Services and Markets Act 2000. The trusts are not allowed to promote themselves to the general public and participation is generally restricted to pension funds and charities. Property unit trusts invest predominantly in freehold or leasehold commercial property yet may hold a small proportion of their investments in the securities of property companies. Their assets are held in the name of a trustee and are managed on a co-operative basis by a separate committee (elected by the unit holders) or company.
Basic quality information
Quality and Methodology Information (270.2 Kb Pdf)
(QMI) report can be found on the Office for National Statistics (ONS) website. The aims of the QMI report are to provide users with a greater understanding of ONS’s statistics, their quality and the methods that are used to create them.
Uses of data
The primary use of data from the insurance companies, pension funds and trusts surveys is in the Financial and Sector Accounts and the compilation of Gross Domestic Product (GDP) estimates within the UK National Accounts and the UK Balance of Payments. There are numerous other users within and outside government who use the data to produce various financial analyses and to inform policy decisions. Such users include:
Bank of England: Data are used for monetary policy and financial stability monitoring.
Department for Work & Pensions: Specifically interested in the investment activity of pension funds, and any pension business undertaken by insurance companies.
Association of British Insurers: Compare its own data to that of ONS, to ensure both datasets display similar trends.
Department for Business, Innovation and Skills: Use data to analyse investment activity across various financial instruments.
Debt Management Office: Data are used to monitor the investment activity in British government securities (gilts).
Investment Management Association: Compare its own data to that of ONS to ensure both datasets display similar trends. They also use the data to provide an overall view of the UK savings and pensions markets and the components that make it up.
European Union’s Statistical Office (Eurostat): Use data to compile statistics at a European level to enable comparisons between countries and to support the development of European fiscal policy.
Organisation for Economic Co-operation & Development (OECD): Analyse investment activity to help formulate economic growth and financial stability recommendations for member countries.
Trade associations, city analysts, institutional investors and fund managers use these data for modelling or forecasting purposes and also to track asset allocation trends. Academics and journalists also use the data for research purposes.
We are constantly aiming to improve this release and its associated commentary. We would welcome any feedback you might have, and would also be particularly interested in knowing how you make use of these data to inform your work. Please contact us via email: Financial.Inquiries@ons.gsi.gov.uk or telephone David Matthews on +44 (0)1633 456756.
Following the success of last year's business statistics user event a second all-day event, coordinated jointly with the Department for Business, Innovation and Skills (BIS) took place on 24 September 2013. The event, The Changing Shape of Trade and Investment in the UK, featured a range of talks from users, producers and suppliers of business trade and investment statistics, not just from central government and the devolved administrations, but also local government, media, business representatives and researchers. To view the content of the day, please visit Storify.
It is difficult to meaningfully compare the ‘Investment by Insurance Companies, Pension Funds and Trusts’ release with that of other countries. This is largely due to different rules and regulations surrounding insurance and pension provision, and also because other countries do not combine data for these specific institutional groups into a single detailed publication. The focus for other countries is frequently on collecting data for National Accounts purposes, not on producing a separate publication for these institutional groups.
Many countries around the world use different sources to collect these data. In some cases the data collection is split between the national statistical office and the central bank (Belgium) or the industry regulator (Finland). The periodicity of data collection also varies between countries; some collect data quarterly (Sweden), others on an annual basis (New Zealand). In addition, some countries use a transactions approach (UK) to data collection, while others prefer a balance sheet style (Ireland).
International bodies such as the (OECD) compare institutional investment data across countries to help formulate economic growth and financial stability recommendations.
Data for all quarters of 2013 remain provisional and subject to revision until the incorporation of the 2013 annual survey results in December 2014.
A revisions policy (50.7 Kb Pdf) is available to assist users with their understanding of the cycle and frequency of data revisions. Users of this release are strongly advised to read this policy before using the data for research or policy related purposes.
Revisions to the data for 2012 have been caused by incorporating the results of the 2012 annual insurance and pension funds surveys. As part of the processing of these results, discrepancies in the returns of individual respondents are identified and corrected by comparing their quarterly and annual returns.
Total net investment in 2012 has been revised downwards to £56 billion from a net investment of £67 billion published last quarter. The most notable revision was in other assets, which decreased by £6 billion.
Net investment for the first quarter of 2012 has been revised from £24 billion to £17 billion. In the second quarter a net investment of £9 billion was revised to £8 billion. In the third quarter net investment has been revised from £24 billion to £18 billion, and in the fourth quarter from £10 billion to £12 billion.
Revisions to data provide one indication of the reliability of key indicators. The table below compares the first published estimate for total net investment with the equivalent figure published three years later. The data start with the first estimate published for Q4 2005 (in March 2006) and compares this with the estimate for the same quarter published three years later (in March 2009). The difference between these two estimates is calculated and this process is repeated for five years of data (all quarters up to Q3 2010). The averages of this difference (with and without regard to sign) are shown in the right hand columns of the table. These can be compared with the value of the estimate in the latest quarter. A statistical test has been applied to the average revision to find out if it is statistically significantly different from zero. An asterisk (*) shows if the test is significant.
|Value in latest quarter||Average revision||Average revision without regard to sign|
|Total net investment||30.7||1.8||5.7|
A spreadsheet is available giving a revisions triangle (381 Kb Excel sheet) of estimates from 1996 to date and the calculations behind the averages in the table.
The introduction of annual survey results with the third quarter figures each year leads to revisions of the published quarterly estimates, both to income and expenditure, and to transactions data. Revisions to transactions data are usually caused by problems with quarterly misreporting of data by businesses, which are identified as part of the quality assurance of the corresponding annual survey returns made by the businesses.
For income and expenditure, the revisions are due to the incorporation of the annual insurance survey results, which are based on larger samples and also, generally reflect audited accounts. It is important to note that for both the pension funds and trusts sectors an annual income and expenditure survey is not undertaken.
For each ‘set’ of surveys (for example, quarterly transactions and quarterly income and expenditure surveys for pension funds) there is a common sample, but each survey is conducted independently, which can result in different response rates. In some instances individual survey questionnaires are completed by different people within the same business, and with limited linkage within existing systems between the surveys at the individual respondent level. Therefore, there can be discrepancies at an aggregate level between the numbers emerging from the transactions and income and expenditure surveys. The set of annual surveys includes balance sheet data from the insurance companies and pension funds sectors. This allows the data to be ‘aligned’ so that transactions, income and expenditure and the balance sheet are consistent. The alignment process assumes that the transactions data are the weakest of the three strands of information and therefore takes the necessary adjustment. This assumption has been confirmed by contact with respondents when data have been queried. It is important to note that no alignment process is currently undertaken for the trusts sector.
The following table shows the average absolute values and revisions (without regard to sign), over the last five years (2008 to 2012), arising from the take-on of the annual survey results. A statistical test has been applied to the average revision to find out if it is statistically significantly different from zero. An asterisk (*) shows if the test is significant.
|Average absolute values||Average absolute revisions|
|Long-term insurance companies|
|General insurance companies|
|Self-administered pension funds|
|Total net investment||52.7||14.4|
The figures in this release are based on a system of quarterly and annual surveys collecting data on income and expenditure, transactions in financial assets and the balance sheet in separate surveys.
|Long-term insurance companies||89|
|General insurance companies||94|
|Self-administered pension funds||86|
|Property unit trusts||82|
|Income and expenditure|
|Long-term insurance companies||85|
|General insurance companies||92|
|Self-administered pension funds||75|
|Long-term insurance companies||99|
|General insurance companies||99|
|Self-administered pension funds||93|
|Income and expenditure|
|Long-term insurance companies||100|
|General insurance companies||99|
|Assets and liabilities|
|Property unit trusts||92|
These points should be noted when examining reference tables (1.69 Mb Excel sheet) :
Total pension contributions made to funded schemes cannot be derived by summing pension premiums from table 2.4 and contributions from table 4.3. To do so would result in double counting since pension business premiums in table 2.4 include any premiums (including transfers) received from self-administered pension funds and any transfers within the long-term insurance sector. More information on this and on other work undertaken to improve pension statistics as part of the 2002 pension contributions statistics review can be found on the ONS website. These pages include a discussion note (25.5 Kb Pdf) on how insurance companies have been recording pension transactions in the surveys used as a source for this release and on improvements made to the survey questionnaires from the first quarter of 2004 to prevent mis-reporting.
Certificates of deposits issued by overseas banks are included in short-term assets overseas.
An increase in borrowing is indicated by a positive figure, a decrease by a negative figure.
Total net investment for long-term funds includes investment by self-administered pension funds in insured funds.
Loans to a parent authority by local authority funds are included with UK local authority securities.
The consolidation adjustment is an adjustment to remove inter-sectoral flows between the different types of financial institution covered by this release. It has been calculated by identifying and calculating totals for net investment in mutual funds such as authorised unit trust units, investment trust securities and insurance managed funds by the institutions.
Components in tables denominated in £ billion may not sum to totals due to rounding.
Definitions and symbols used
† data have been revised since the last edition; the period marked is the earliest to have been revised.
.. not available.
- nil or less than £0.5 million.
A glossary (211.8 Kb Pdf) is available to assist users with their understanding of the terms used in this release.
It is sometimes necessary to suppress figures for certain items in order to avoid disclosing investment activity by individual institutions. In these cases the figures are usually combined with those for another item and this will be indicated in the tables by means of a footnote.
The United Kingdom Statistics Authority has designated these statistics as National Statistics, in accordance with the Statistics and Registration Service Act 2007 and signifying compliance with the Code of Practice for Official Statistics.
Designation can be broadly interpreted to mean that the statistics:
meet identified user needs;
are well explained and readily accessible;
are produced according to sound methods, and
are managed impartially and objectively in the public interest.
Once statistics have been designated as National Statistics it is a statutory requirement that the Code of Practice shall continue to be observed.
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Government Statistical Service (GSS) business statistics
To find out about other official business statistics, and choose the right data for your needs, use the GSS Business Statistics Interactive User Guide. By selecting your topics of interest, the tool will pinpoint publications that should be of interest to you, and provide you with links to more detailed information and the relevant statistical releases. It also offers guidance on which statistics are appropriate for different uses.
Discussing ONS business statistics online
There is a Business and Trade Statistics community on the StatsUserNet website. StatsUserNet is the Royal Statistical Society’s interactive site for users of official statistics. The community objectives are to promote dialogue and share information between users and producers of official business and trade statistics about the structure, content and performance of businesses within the UK. Anyone can join the discussions by registering via either of the links.
ONS has published commentary, analysis and policy on 'Special Events' which may affect statistical outputs. For full details visit the Special Events page on the ONS website.
All data in this release can be downloaded free of charge from the ONS website. Here are the instructions to obtain a full time series of data from the statistical bulletin or release pages:
Select 'Data in this release';
Select 'View datasets associated with this release';
Select the latest release;
Select 'Select series from this dataset';
Select the reference table of interest;
Select 'View series';
Select the series of interest (Hint: for a custom download you can use SHIFT to select a range of series or CTRL to select multiple individual series);
Select 'View selection';
Details of the policy governing the release of new data are available by visiting www.statisticsauthority.gov.uk/assessment/code-of-practice/index.html or from the Media Relations Office email: email@example.com
These National Statistics are produced to high professional standards and released according to the arrangements approved by the UK Statistics Authority.
|David Matthews||+44 (0)1633 456756||Business Outputs and Developments Division||Financial.Inquiries@ons.gsi.gov.uk|