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Statistical bulletin: MQ5: Investment by Insurance Companies - Pension Funds and Trusts, Q1 2012 This product is designated as National Statistics

Key points

  • Total net investment is estimated to have been £34 billion in the first quarter of 2012, approximately £25 billion higher than the estimate for the fourth quarter of 2011.
  • At Q1 2012, net investment in short-term assets (those maturing within one year) was estimated to be £24 billion. This is the highest level since records began in 1983 and may be evidence of how institutions are restructuring their investment portfolios.
  • Self-administered pension funds are estimated to have shown net investment of £20 billion at Q1 2012. This is the highest level recorded since quarterly records began in 1983.

Overview

This release contains quarterly net investment data arising from financial transactions (investments) made by insurance companies, self-administered pension funds, investment trusts, unit trusts and property unit trusts. Also included are quarterly balance sheet data for short-term assets and liabilities, along with income and expenditure data for insurance companies and self-administered pension funds. All data are reported on a current price basis.

In addition, every third quarter 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.

We 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.

A glossary (112.9 Kb Pdf) is available to assist users with their understanding of the terms used in this release.

User engagement

We are constantly aiming to improve this release and its associated commentary. We would welcome any feedback you might have; please contact us via email: financial.inquiries@ons.gsi.gov.uk or telephone David Matthews on +44 (0)1633 456756.

Net investment by asset type

The total assets of the businesses covered by this release were valued at around £3,000 billion at the end of 2010, the latest period for which annual results are available. On average, these businesses, in a twelve month period, acquired and disposed of nearly £400 billion of assets. Net investment is the difference between these substantial levels of acquisitions and disposals and can therefore be volatile. Table 1 displays net investment data by asset type.

Net investment is estimated to have been £34 billion at Q1 2012 (Figure 1); which is substantially higher than the average of £14 billion per quarter for 2011 and the Q4 2011 estimate of £9 billion. However, this estimate is in line with the estimate for Q4 2010 of £30 billion. The estimate for Q1 2012 is the highest level of net investment since Q2 2009 (£38 billion).

Figure 1: Total net investment

Figure 1: Total net investment

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Within this total estimate, net investment in short-term assets (those maturing within one year of their originating date) was estimated to be £24 billion (Figure 2). This is the highest level since records began in 1983 and may be evidence of how institutions are restructuring their investment portfolios. This estimate is approximately £22 billion higher than Q4 2011 and greater than the total annual level of net investment for the periods 2008 to 2011.

Figure 2: Net investment in short-term assets

Figure 2: Net investment in short-term assets

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Since the end of 2008, the yield on British government sterling securities (Gilts) has tended to fall and, although this investment is effectively risk-free, the returns on it may cause fund managers to switch into or out of Gilts. The fund managers of institutions covered by this release actively disinvested in Gilts at Q1 2012, to the value of £9 billion (Figure 3). This is the largest single period of disinvestment in Gilts since Q3 2001. It is also in contrast to the whole of 2011 when net investment was pretty flat and in stark contrast to 2010 when there was net investment of £29 billion, a record in current price terms in a series going back to 1984.

Figure 3: Net investment in British government sterling securities

Figure 3: Net investment in British government sterling securities

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The last survey of these businesses’ balance sheets, for the end of 2010, showed that for the first time the value of overseas ordinary shares held by these institutions then exceeded the value of UK ordinary shares. This trend may have continued throughout 2011 and into 2012 (though we would need the revaluation data that are implicit in the balance sheet survey to be sure). In 2011 as a whole and at Q1 2012, there was disinvestment in UK corporate securities and investment in overseas securities (Figures 4 and 5).

Figure 4: Net investment in UK corporate securities

Figure 4: Net investment in UK corporate securities

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Figure 5: Net investment in overseas securities

Figure 5: Net investment in overseas securities

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Investment in ‘other assets’, which includes mutual fund investment, has been positive for a long period and remained so in the first quarter of 2012. As suggested in the last release, net investment under this heading has in recent years shown a tendency to be higher in the second half of the year than the first. It will be interesting to see if this pattern continues after a strong investment in ‘other assets’ in the first quarter of 2012 (£10 billion) – a total which is only slightly lower than the third (£12 billion) and fourth (£12 billion) quarters of 2011, but noticeably higher than the first two quarters of last year (£4 billion and £6 billion respectively) (Figure 6).

Figure 6: Net investment in other assets

Figure 6: Net investment in other assets

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Table 1: Net investment by asset type

£ billion
  Short- term assets British government sterling securities UK corporate securities   Overseas securities   Other assets       Total
2006 25.1 19.4 -16.6 33.4 23.1 84.5
2007 41.1 -0.4 -16.5 44.2 20.9 89.4
2008 -4.8 -19.6 7.4 15.3 27.3 25.5
2009 -4.2 13.9 9.1 43.3 31.3 93.5
2010 -7.6 29.2 -18.5 24.8 43.2 71.1
2011 9.7 1.5 -18.6 27.7 34.7 54.9
             
2006 Q2 14.6 2.6 -4.3 9.4 8.4 30.7
          Q3 8.5 4.2 -4.5 7.8 3.6 19.6
          Q4 0.1 6.8 -4.8 10.4 5.9 18.4
             
2007 Q1 1.2 7.9 -3.9 7.4 4.3 16.9
          Q2 11.3 -3.1 -5.0 16.8 1.8 21.8
          Q3 19.2 -5.1 5.2 18.0 6.6 43.9
          Q4 9.4 0.0 -12.8 2.0 8.2 6.8
             
2008 Q1 5.5 -6.6 3.3 3.7 5.2 11.2
          Q2 -0.3 -4.7 -0.1 8.6 8.1 11.6
          Q3 10.6 -2.2 2.8 7.3 3.8 22.2
          Q4 -20.5 -6.1 1.4 -4.3 10.1 -19.5
             
2009 Q1 -0.3 0.8 2.9 4.4 0.0 7.8
          Q2 0.8 3.3 7.3 17.7 8.5 37.7
          Q3 -8.0 8.2 1.7 13.0 8.4 23.3
          Q4 3.3 1.6 -2.8 8.2 14.4 24.8
             
2010 Q1 -1.1 8.6 -8.8 1.9 3.6 4.2
          Q2 -10.8 8.1 0.7 0.4 8.7 7.1
          Q3 -5.4 4.9 -0.2 13.7 16.5 29.5
          Q4 9.7 7.7 -10.3 8.9 14.4 30.4
             
2011 Q1 10.3 2.6 -5.0 7.3 4.3 19.3
          Q2 1.4 0.6 -1.0 7.1 6.4 14.6
          Q3 -3.5 -2.9 -1.6 7.9 12.3 12.3
          Q4 1.6 1.1 -11.1 5.3 11.8 8.7
             
2012 Q1 23.8 -8.9 -4.6 13.3 10.3 34.0

Table source: Office for National Statistics

Table notes:

  1. Components may not sum to totals due to rounding.

    Data for all quarters of 2011 remain provisional and subject to revision until the incorporation of the 2011 annual survey results in December 2012. Similary, data for all periods of 2012 will remain provisional until December 2013.

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Net investment by institutional group

Net investment data for each of the institutional groups covered by this release are displayed in Table 2.

Long-term insurance companies showed net investment of £3 billion at the first quarter of 2012 (Figure 7). This is only the second recorded period of investment since Q4 2010, but is in-line with the five year quarterly average for this series. As reported last quarter, disinvestment is still estimated to have occurred in three of the four quarters of 2011 and for 2011 as a whole, the first year this has occurred in a series going back to 1963.

Figure 7: Net investment by long-term insurance companies

Figure 7: Net investment by long-term insurance companies

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General insurance companies are estimated to have shown a similar level (£3 billion) of investment at Q1 2012 to long-term insurance companies. This level of investment is the highest recorded by general insurance companies since Q3 2008 (Figure 8).

Figure 8: Net investment by general insurance companies

Figure 8: Net investment by general insurance companies

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There was a record level of net investment by self-administered pension funds at Q1 2012 of £20 billion. This is the highest quarterly level ever recorded since records began at Q1 1983, surpassing the previous high estimate of £18 billion at Q1 2011 (Figure 9). The estimate for Q1 2012 is nearly £12 billion greater than the estimate for the previous quarter, but only £2 billion greater than the same quarter last year. One factor that may have contributed to this record is the significant increase in employer contributions this quarter, a record itself, of £16 billion (see Figure 13).

Figure 9: Net investment by self-administered pension funds

Figure 9: Net investment by self-administered pension funds

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The trend in the figures for investment trusts at Q1 2012 continued broadly flat as it has been since the beginning of 2008. Unit trusts and property unit trusts, however, continued to invest in the first quarter of 2012 (Figure 10). In each of the last three years, net investment by these institutions has been over £30 billion a year.

Figure 10: Net investment by trusts

Figure 10: Net investment by trusts

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Table 2: Net investment by institutional group

£ billion
  Insurance  companies Self- administered pension funds Trusts   Consolidation adjustment1   Total
    Investment Unit & property unit
  Long-term   General
2006 25.0 12.0 23.7 -1.8 34.1 -8.6 84.5
2007 39.5 5.0 13.3 -2.8 32.8 1.7 89.4
2008 17.0 9.4 -20.4 0.3 17.7 1.5 25.5
2009 5.9 4.9 32.9 -0.6 46.8 3.6 93.5
2010 15.6 -3.2 19.7 0.5 44.0 -5.5 71.1
2011 -14.0 5.5 34.9 0.4 34.8 -6.7 54.9
               
2006 Q2 9.7 6.5 4.1 -0.8 12.9 -1.7 30.7
          Q3 5.6 2.3 5.1 -0.6 6.8 0.4 19.6
          Q4 9.8 -0.3 7.5 0.1 4.5 -3.1 18.4
               
2007 Q1 10.4 -1.7 -1.4 -1.0 9.7 0.8 16.9
          Q2 7.3 -0.1 5.9 -0.2 12.8 -3.9 21.8
          Q3 15.8 1.5 9.0 -0.4 11.1 6.8 43.9
          Q4 5.8 5.3 -0.2 -1.2 -0.9 -2.1 6.8
               
2008 Q1 9.9 0.8 -3.9 0.6 6.5 -2.7 11.2
          Q2 6.8 3.3 0.9 -0.7 3.5 -2.3 11.6
          Q3 11.4 4.5 0.1 0.8 5.1 0.2 22.2
          Q4 -11.1 0.7 -17.6 -0.4 2.6 6.4 -19.5
               
2009 Q1 0.8 1.4 2.6 -0.3 7.9 -4.7 7.8
          Q2 12.2 1.6 13.8 -0.2 11.0 -0.8 37.7
          Q3 1.2 -0.8 8.0 0.1 15.6 -0.8 23.3
          Q4 -8.4 2.7 8.6 -0.2 12.3 9.9 24.8
               
2010 Q1 1.1 -6.5 -0.1 -0.7 7.9 2.4 4.2
          Q2 2.7 0.4 -6.3 0.7 15.2 -5.5 7.1
          Q3 7.4 0.8 15.1 0.0 7.4 -1.1 29.5
          Q4 4.5 2.0 11.0 0.5 13.6 -1.3 30.4
               
2011 Q1 -7.5 0.1 18.2 0.6 7.4 0.4 19.3
          Q2 -1.3 2.2 2.8 0.3 11.5 -0.8 14.6
          Q3 0.4 1.8 5.3 -0.1 9.5 -4.6 12.3
          Q4 -5.6 1.4 8.6 -0.5 6.4 -1.7 8.7
               
2012 Q1 2.8 3.4 20.4 -0.1 10.1 -2.6 34.0

Table source: Office for National Statistics

Table notes:

  1. The consolidation adjustment is an adjustment to remove inter-sectoral flows between the different types of institutions covered by this statistical bulletin. The adjustment includes (i) investment in authorised unit trust units and investment trust shares by insurance companies, pension funds and trusts and (ii) investment by pension funds in insurance managed funds.

  2. Components may not sum to totals due to rounding.

    Data for all quarters of 2011 remain provisional and subject to revision until the incorporation of the 2011 annual survey results in December 2012. Similary, data for all periods of 2012 will remain provisional until December 2013.

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Income and expenditure by institutional group

Rather than provide commentary on total income and expenditure for the institutional groups, it was considered more beneficial to users if commentary concentrated 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 £27 billion in the first quarter of 2012 (Figure 11), were at similar levels to all quarters of the past three years, but were slightly below the five year quarterly average of £31 billion.

Back in 2006 and 2007 the value of premiums exceeded the value of claims. This trend has been reversed since and has continued into 2012. In each of the years 2008 to 2010, the value of claims was around 23 per cent greater than the value of premiums. In 2011, claims amounted to £141 billion against premiums of £108 billion (a 30 per cent difference). At Q1 2012, claims (£34 billion) were 26 per cent greater than the value of premiums (£27 billion).

Figure 11: Long-term insurance companies' premiums and claims

Figure 11: Long-term insurance companies' premiums and claims

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For general insurance, premiums were 52 per cent greater than the value of claims at Q1 2012 (Figure 12). These series have remained relatively unchanged for the past six years.

Figure 12: General insurance companies' premiums and claims

Figure 12: General insurance companies' premiums and claims

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Contributions (net) to self-administered pension funds for the first quarter of 2012 (£16 billion) were at the highest level since these data were first collected in 1992 (Figure 13). This was largely as a result of record levels of special employer contributions being reported, with a number of funds making one-off payments to reduce deficits in their funds. This record continues to confirm a pattern of behaviour in which self-administered pension funds increase the level of their special contributions during the first and fourth quarters of each year. Estimates for the past five years show that figures for total contributions for these quarters tend to be higher than those for the other quarters of the year.

Figure 13: Self-administered pension funds' contributions (net) and payments

Figure 13: Self-administered pension funds' contributions (net) and payments

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Table 3: Income and expenditure by institutional group

£ billion
  Long-term insurance General insurance Self-administered pension funds
  Premiums   Claims   Premiums   Claims Contributions  (net)   Payments
2006 142.0 132.3 40.3 25.5 40.5 39.9
2007 166.2 156.9 36.9 24.3 38.7 39.1
2008 135.1 166.9 41.7 26.1 34.3 41.1
2009 114.6 141.1 39.5 26.4 37.7 44.5
2010 111.2 136.1 34.3 24.8 45.6 48.3
2011 108.0 140.7 34.9 23.9 43.1 48.8
             
2006 Q2 34.6 32.9 10.7 5.8 7.8 9.9
          Q3 35.8 34.9 9.8 7.2 8.5 10.3
          Q4 40.9 35.0 9.6 6.4 11.8 10.4
             
2007 Q1 41.3 40.2 7.8 6.2 10.7 9.4
          Q2 45.0 39.4 10.0 5.8 9.2 9.7
          Q3 47.0 37.6 9.4 5.9 8.7 9.7
          Q4 32.8 39.6 9.7 6.4 10.1 10.3
             
2008 Q1 29.6 38.8 11.6 6.9 10.1 9.8
          Q2 40.8 41.1 10.1 6.5 8.2 10.1
          Q3 36.1 39.9 10.1 6.1 7.8 10.5
          Q4 28.6 47.1 9.9 6.7 8.2 10.7
             
2009 Q1 27.0 32.6 9.7 6.8 10.2 10.3
          Q2 28.0 27.9 10.8 6.5 7.7 11.2
          Q3 29.5 35.4 10.0 6.5 8.1 11.4
          Q4 30.1 45.1 9.0 6.6 11.7 11.6
             
2010 Q1 29.3 38.3 7.9 5.9 11.9 12.0
          Q2 29.0 33.2 9.0 5.9 11.5 12.2
          Q3 23.1 30.3 8.8 6.2 10.3 12.1
          Q4 29.8 34.3 8.6 6.7 11.9 12.0
             
2011 Q1 26.6 36.9 8.7 6.3 12.4 11.8
          Q2 28.2 34.5 9.4 6.0 9.8 12.5
          Q3 26.0 31.6 8.6 5.8 9.4 12.4
          Q4 27.2 37.7 8.2 5.8 11.5 12.2
             
2012 Q1 26.5 34.3 9.4 6.2 15.8 12.3

Table source: Office for National Statistics

Table notes:

  1. Components may not sum to totals due to rounding.

    Data for all quarters of 2011 remain provisional and subject to revision until the incorporation of the 2011 annual survey results in December 2012. Similary, data for all periods of 2012 will remain provisional until December 2013.

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Background notes

  1. Institutional groups

    Insurance companies

    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 is mainly 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.

    Investment trusts

    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.

    Unit trusts

    The data covers unit trusts authorised by the Financial Services Authority under the terms of the Financial Services Act 1986. The statistics include open ended investment companies but they do not cover other unitised collective investment schemes (e.g. 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 Act 1986. 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.

  2. Basic quality information

    A Quality and Methodology Information (QMI) report (270.2 Kb Pdf) can be found on the 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.

  3. 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 purposes.

    Department for Work & Pensions

    Specifically interested in the investment activity of pension funds, and any pension business undertaken by insurance companies.

    HM Revenue and Customs

    Data are used to aid taxation analysis of financial institutions.

    Association of British Insurers

    Compare their 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).

    European Union’s Statistical Office (Eurostat)

    Use data to compile statistics at a European level to enable comparisons between countries.

    Organisation for Economic Co-operation and 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.

  4. International comparisons

    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 don’t combine data for these specific institutional groups into a single detailed publication. The focus for other countries is frequently on collecting the 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 Organisation for Economic Co-operation and Development (OECD) compare institutional investment data across countries to help formulate economic growth and financial stability recommendations.

  5. Revisions

    Data for all quarters of 2011 remain provisional and subject to revision until the incorporation of the 2011 annual survey results in December 2012. Similarly, data for all periods of 2012 will remain provisional until December 2013.

    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.

    Quarterly

    All four quarters of 2011 have been revised, partly as a result of late questionnaires being received and partly as a result of disaggregate data revisions. In the first quarter of 2011, net investment has been revised from £19.8 billion to £19.3 billion, in the second quarter from £18.3 billion to £14.6 billion, in the third quarter from £13.5 billion to £12.3 billion and in the fourth quarter from £20.4 billion to £8.7 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 starts with the first estimate published for Q2 2004 (in September 2004) and compares this with the estimate for the same quarter published three years later (in September 2007). The difference between these two estimates is calculated and this process is repeated for five years of data (all quarters up to Q1 2009). 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.

    Table 4: Revisions between first publication and estimates three years later

    £ billion
      Value in  latest quarter   Average  revision Average revision without regard to sign
    Total net investment 34.0 0.2 5.2
           

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    A spreadsheet is available giving a revisions triangle (327.5 Kb Excel sheet) of estimates from 1996 to date and the calculations behind the averages in the table.

    Annual

    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 take 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 (2006 to 2010), arising from the take-on of the annual survey results.

    Table 5: Average values and revisions (2006 to 2010)

     
    £ billion
      Average absolute values Average absolute revisions
    Long-term insurance companies  
         Total income 205.5 13.7
         Total expenditure 198.7 7.0
         Net Investment 20.6 13.4
         
    General insurance companies  
         Total income 47.7 3.5
         Total expenditure 45.9 3.4
         Net Investment 5.6 3.8
         
    Self-administered pension funds  
         Net Investment 13.8 8.3
         
    Total net investment 72.8 12.0
        

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  6. General information

    These points should be noted when examining data tables:

    • 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 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.

  7. Response rates

    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.

    Table 6: Overall response rate by survey

    Q1 2012 %
    Transactions    
         Long-term insurance companies 89
         General insurance companies 86
         Self-administered pension funds 79
         Unit trusts   85
         Investment trusts 94
         Property unit trusts 85
         
    Income and expenditure  
         Long-term insurance companies 86
         General insurance companies 86
         Self-administered pension funds 80
         
    2010 Annual   %
    Balance sheet    
         Long-term insurance companies 99
         General insurance companies 96
         Self-administered pension funds 92
         
    Income and expenditure  
         Long-term insurance companies 100
         General insurance companies 98
         
    Assets and liabilities  
         Unit trusts   91
         Investment trusts 98
         Property unit trusts 100

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  8. 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 £0.5m

    A glossary (112.9 Kb Pdf) is available to assist users with their understanding of the terms used in this release.

  9. Disclosure

    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.

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