MQ5: Investment by Insurance Companies, Pension Funds and Trusts: Q1 2015

Investment choices of financial institutions based on financial transactions (investments and disinvestment), including balance sheet data for short-term assets and liabilities, and income and expenditure data.

Nid hwn yw'r datganiad diweddaraf. Gweld y datganiad diweddaraf

Cyswllt:
Email Fred Norris

Dyddiad y datganiad:
18 June 2015

Cyhoeddiad nesaf:
17 September 2015

1. Main points

  • Net investment of £7 billion was reported by insurance companies, pension funds and trusts in the first quarter of 2015. The five-year quarterly average for this series is net investment of £12 billion
  • In Q1 2015 (January to March) there was net investment of £13 billion in short-term assets, the largest quarterly net investment in this asset type since Q1 2013. This may signal that businesses are reluctant to commit to longer-term investment strategies at this time
  • The Q1 2015 estimate of net investment by unit trusts and property unit trusts of £7 billion in short term assets was the largest level of net investment since the start of this series in 1980
  • The net disinvestment of £3 billion in other UK corporate securities (corporate bonds and preference shares) in Q1 2015 was the largest since records began in 1986. This followed a similar level of net disinvestment in the previous quarter
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2. Overview

Information about the investment choices of insurance companies, self-administered pension funds, investment trusts, unit trusts and property unit trusts. This release contains quarterly net investment data arising from financial transactions (investments and disinvestments) 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 considerable 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 compilation of the UK National Accounts.

We make 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.

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. Comparing the first published estimates of total net investment with the equivalent estimates published 3 years later, the average quarterly revision (without regard to sign) is £8 billion.

The estimate of total net investment for Q4 2014 (last quarter) has been revised upwards by £0.6 billion (see background note 7 for further information).

A glossary is available to assist users with their understanding of the terms used in this release.

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3. Your views matter - Future changes to MQ5

Over the next few years, changes to surveys covering the financial sector will be necessary to ensure we become compliant with the European System of Accounts 2010 (ESA10). ESA10 introduces changes in the measurement and classification of financial instruments and the structure of the financial sector.

This will result in wide ranging changes to the surveys used to collect the data presented in MQ5. In order to ensure these statistics continue to meet user needs as far as possible, we carried out a consultation during March 2015 to establish how users make use of MQ5 data and their preferences for the future publication of these statistics.

The consultation has now closed, however we are constantly aiming to improve this release and associated commentary and would welcome any feedback you might have. We 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.gov.uk or telephone Fred Norris on +44 (0)1633 456109.

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4. Net investment by asset type

The total assets of the businesses covered by this release (insurance companies, pension funds and trusts) were valued at £3,473 billion at the end of 2013, the latest period for which annual results are available. During 2013, these businesses acquired £1,666 billion and disposed of £1,638 billion longer-term financial instruments. 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 therefore be volatile. Table 1 (at the end of this section) displays net investment data by asset type.

In Q1 2015 (January to March) there was net investment of £7 billion (Figure 1).

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 £12 billion. The highest quarterly estimate of net investment since records began (in 1987) was £43 billion in Q3 2007.

For 2014 as a whole, net investment reported by the institutions covered by this release is provisionally estimated at £43 billion, compared with £56 billion and £48 billion in 2012 and 2013 respectively.

Short-term assets

Investment in short-term assets (those maturing within one year of their originating date) 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 Q1 2015 there was net investment of £13 billion in short-term assets, the largest net investment in this asset type since Q1 2013 (Figure 2). This may signal that businesses are reluctant to commit to longer-term investment strategies at this time and may reflect increased uncertainty during this quarter.

There was net disinvestment in short-term assets in each of the years 2008, 2009 and 2010 (see download for Figure 2). This contrasts with the years since 2011, when net investment has been reported. This longer-term comparison highlights how institutions, taking account of the prevailing economic climate, have chosen to restructure their investment portfolios.

UK Government Sterling Securities (Gilts)

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 notably 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 disinvestment in gilts in Q1 2015 of £4 billion (Figure 3). This was the second consecutive quarter of net disinvestment in gilts, following a continuous period of quarterly net investment dating back to Q4 2012.

Net investment in gilts is provisionally estimated to be £17 billion in 2014, following net investment of £13 billion in 2013. This was preceded by net disinvestment in 2011 and 2012. Looking at this annual picture, it would seem to suggest that some market participants (particularly pension funds) have been switching back to gilts in recent years, possibly in an attempt to avoid the relative volatility of equity markets.

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.

Investment in gilts is discussed in more detail in the article - 'Trends in gilt investment from 2007-2013'.

UK Corporate Securities and Overseas Securities

These asset categories comprise ordinary shares, corporate bonds and preference shares. In addition, non-UK government securities are included as part of overseas securities.

Balance sheet estimates for the end of 2013, showed that for only the fourth 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 2014 (annual balance sheet survey data are required to confirm this assertion).

This change in strategy, over the past four years, marks a key shift and would seem to indicate that the institutions covered by this release have sought higher returns relative to risk on their investments in overseas markets in preference to investing in UK securities.

This shift in behaviour is supported by external analysis. In May 2014, the Telegraph commented on research undertaken by Capita, suggesting that dividend payments for British shares will fall during 2014 and observed “with these clouds on the horizon some experts argue income investors should instead shop for divi-paying shares overseas. As well as there being much greater choice – there are seven times more income paying shares overseas than are listed on London's stock exchange.”

UK corporate securities

In Q1 2015 there was net disinvestment (£10 billion) in UK corporate securities (Figure 4), the largest disinvestment since the fourth quarter of 2011. This follows net disinvestment of £6 billion in Q4 2014 and continues a period of disinvestment that now extends over ten quarters. The 2014 provisional annual estimate was net disinvestment of £15 billion in UK corporate securities.

In Q1 2015 there was net disinvestment of £3 billion in other UK corporate securities (corporate bonds and preference shares). This was the largest disinvestment in these assets since records began in 1986 and was driven by disinvestment by unit trusts and property unit trusts (£2 billion) and long-term insurance companies (£1 billion).

Overseas securities

In contrast to the trend of net disinvestment in UK corporate securities, Q1 2015 was the eighth consecutive quarter of net investment in overseas securities. This may continue to indicate that businesses have more confidence in their ability to make money from overseas securities than they do from UK corporate securities.

In Q1 2015 the institutions covered by this release reported net investment in overseas securities of £3 billion (Figure 5). The five-year quarterly average for this series is net investment of £6 billion.

The net disinvestment in overseas ordinary shares (£7 billion) was the fifth consecutive quarter of disinvestment in these assets. The net investment of £3 billion in overseas government securities was the largest in these assets since the second quarter of 2007.

Other Assets

The category ‘other assets’ covers UK and overseas investment, and includes: mutual fund investments, investment in insurance managed funds, UK government securities denominated in foreign currency, local authority and public corporation securities, loans, fixed assets, insurance policies and annuities, direct investment and other assets not elsewhere classified.

Investment in other assets has been positive since Q3 2003. The net investment of £6 billion in Q1 2015 (Figure 6) matches the five-year quarterly average for this series of £6 billion and was driven by net investment in overseas mutual fund investments and insurance managed funds, insurance policies and annuities.

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5. Net investment by institutional group

Net investment data for each of the institutional groups covered by this release are displayed in Table 2 (at the end of this section).

Long-term insurance companies

These are companies which 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 disinvestment of £4 billion in the first quarter of 2015 (Figure 7). The five-year quarterly average for this series is net disinvestment of £0.5 billion.

General insurance companies

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, most commonly 12 months.

General insurance companies showed net disinvestment in Q1 2015 (January to March) of £2 billion (Figure 8), the second consecutive quarter of net disinvestment by this institutional group following 6 quarters of net investment. The five-year quarterly average for this series is net investment of £0.5 billion.

Self-administered pension funds

These are funds established by pension scheme trustees to facilitate and organise the investment of employees’ retirement funds.

Self-administered pension funds reported net investment in Q1 2015 of £11 billion (Figure 9), following net disinvestment of £7 billion in the previous quarter. The five-year quarterly average for this series is net investment of £5 billion.

In Q1 2015 self-administered pension funds reported net investment in other assets of £7 billion. This was the largest net investment in other assets by these businesses since Q4 2007 and was driven by net investment in overseas mutual fund investments (£4 billion) and insurance managed funds, insurance policies and annuities (£3 billion).

It is possible that pension changes enacted in the Taxation of Pensions Act 2014 may prompt a slowdown in the rate of bond purchases. Under the changes, individuals will no longer be required to purchase an annuity on retirement using the proceeds of defined contribution (DC) pension funds – a move that Her Majesty’s Treasury has acknowledged could prompt demands for similar withdrawal rights from those in defined benefit (DB) schemes. This could mean that schemes may cut their long-term holdings of gilts and bonds.

Investment trusts

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.

In the first quarter of 2015, investment trusts reported net disinvestment of £1 billion (Figure 10). This was the largest net disinvestment by these businesses since the fourth quarter of 2007 and was driven by disinvestment in ordinary shares (UK and overseas).

Unit trusts and property unit trusts

Unit trusts include open-ended investment companies (OEICs) but do not cover other unitised collective investment schemes or those based offshore. They 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 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 have reported net investment in each quarter since 2007 Q4 (Figure 11). However the level of net investment by unit trusts and property unit trusts in Q1 2015 (£6 billion) is much lower than the five-year quarterly average for this institutional group (£11 billion).

In Q1 2015 there was net disinvestment of £4 billion by unit trusts and property unit trusts in UK corporate securities, the largest net disinvestment in this asset type by these businesses since records began (in 1986). In contrast, their net investment of £7 billion in short-term assets was their largest net investment in this asset type since records began (in 1980). This may indicate the reallocation of funds as part of a wider change in investment strategy.

The provisional full-year estimate of net investment by unit trusts and property unit trusts for 2014 (£47 billion) follows net investment of £53 billion in 2012 and £51 billion in 2013. The annual estimate for 2012 was the highest annual level of net investment recorded by any institutional group, since the net investment of £53 billion reported by long-term insurance companies in 1999.

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6. Income and expenditure by institutional group

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 of refunds) and payments are the focus for self-administered pension funds (See Table 3, at the end of this section). It should be noted that income and expenditure data are not currently collected for the trusts institutional group.

Long-term insurance companies

In the first quarter of 2015 (January to March), the value of long-term insurance premiums was £26 billion (Figure 12), a decrease from £29 billion in the previous quarter and in line with the five-year quarterly average of £28 billion.

The value of premiums exceeded the value of claims between 2003 (when records for this series began) and 2007. However, this trend reversed and has continued in each of the years 2008 to 2013. Provisional estimates for 2014 show the value of claims to be around 35% greater than the value of premiums. In Q1 2015, claims (£34 billion) were approximately 34% greater than the value of premiums (£26 billion).

General insurance companies

For general insurance, premiums (£9 billion) were around 55% greater than the value of claims (£6 billion) in Q1 2015 (Figure 13).

Self-administered pension funds

Contributions to self-administered pension funds (net of refunds) in the first quarter of 2015 matched the five-year quarterly average for this series of £11 billion.

In recent years there seems to be a pattern for pension funds to make one-off payments in Q1 of a given year, in order to reduce the deficits in their funds. This would lead to generally higher net contributions in these quarters compared with other quarters of the year (Figure 14). A possible explanation for this pattern is that companies with defined benefit schemes, while compiling their end of year accounts, are better placed to determine the level of contributions needed to fund any deficit. Deficits can be addressed in the form of employers’ special contributions. Estimates of these one-off payments were relatively high in the first quarters 2012 (£8 billion), 2013 (£8 billion) and 2014 (£5 billion). In Q1 2015, the provisional estimate of special contributions was £3 billion, in line with the previous 3 quarters.

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.Background notes

  1. Institutional groups

    Insurance companies

    Active in both life insurance and non-life 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 home, motor and travel insurance) is largely concerned with the spreading of risks between persons and organisations.

    Long-term insurance companies typically hold premium income for a long time, therefore investment income is a significant component of their overall income.

    Besides consisting of life insurance, long-term business also includes workplace and individual personal pension business. Pension business includes both insured funds and insurance managed funds. Fully 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. Insurance managed business is where investment of the pension funds for a group of employees is managed by an insurance company. This is in the form of an investment contract in which the insurance company offers participation in one or more pooled funds. Insurance managed funds are reported both by insurance companies and self-administered pension funds, so caution should be exercised if combining estimates from the two sources.

    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

    A self-administered pension 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. Insurance managed funds are reported both by insurance companies and self-administered pension funds (see ‘Insurance Companies’).

    Fully insured funds are excluded but their activity is included in figures for insurance companies' long-term business.

    The data in this release relates 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. The main superannuation arrangements in central government are unfunded and these are excluded from the statistics. Investment Trusts

    The figures cover investment trusts recognised as such by HM Revenue & Customs for tax purposes and some unrecognised trusts. Investment trusts 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 Conduct Authority under the terms of the Financial Services and Markets Act 2000. The statistics include open-ended investment companies (OEICs) but they do not cover other unitised collective investment schemes (for example unauthorised funds run on unit trust lines by, 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. 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) (268.3 Kb Pdf) report can be found on our website. The QMI report aims to provide users with a greater understanding of our statistics, their quality and the methods that are used to create them.

  3. Administrative data

    The surveys that underpin this release use administrative data sources as their target populations. Further information can be found in the QMI report linked in background note 2.

  4. 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.

    HM Revenue and Customs : Data are used to aid taxation analysis of financial institutions.

    Association of British Insurers: Compare its own data to that of our data 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).

    The Investment Association: Compare its own data to that of our data to ensure both 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.

  5. Your views matter

    We are constantly aiming to improve this release and 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.gov.uk or telephone Fred Norris on +44 (0)1633 456109.

    There is a Business and Trade Statistics community on the StatsUserNet website. For more information, see background note 15.

  6. 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 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.

  7. Revisions

    Data for all quarters of 2014 remain provisional and subject to revision until the incorporation of the 2014 annual survey results in December 2015.

    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 these data for research or policy related purposes.

    Quarterly

    All quarters of 2014 have been revised, partly as a result of late questionnaires being received and partly as a result of disaggregate data revisions. Net investment has been revised in Q1 2014 (from £23.9 billion to £22.4 billion), in Q2 2014 (from £10.0 billion to £13.8 billion) and Q3 2014 (from £16.6 billion to £16.9 billion). Q4 2014 has been revised from net disinvestment of £11.0 billion to net disinvestment of £10.4 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 3 years later. The data start with the first estimate published for Q2 2007 (in September 2007) and compares this with the estimate for the same quarter published 3 years later (in September 2010). The difference between these two estimates is calculated and this process is repeated for 5 years of data (all quarters up to Q1 2012). 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.

    A spreadsheet is available giving a revisions triangle (393.5 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 pension funds and trusts 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. This allows 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 5 years (2009 to 2013), 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.

  8. 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.

  9. General information

    These points should be noted when examining reference 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 our 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.
  10. Definitions and symbols used

    † data have been revised since the last edition; the period marked is the earliest to have been revised.
    c suppressed to avoid the disclosure of confidential data.
    - nil or less than £0.5 million.
    : not available.

    Throughout this release Q1 refers to Quarter 1 (January to March), Q2 refers to Quarter 2 (April to June), Q3 refers to Quarter 3 (July to September) and Q4 refers to Quarter 4 (October to December).

    A glossary of the terms used in this release is available to assist users.

  11. 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.

  12. National statistics

    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
    • 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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    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.

  15. Discussing 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.

  16. Special events

    We have published commentary, analysis and policy on 'Special Events' which may affect statistical outputs. For full details visit the Special Events page on our website.

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    All data in this release can be downloaded free of charge from our website. Here are the instructions to obtain a full time series of data from the statistical bulletin or release pages:

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    These National Statistics are produced to high professional standards and released according to the arrangements approved by the UK Statistics Authority.

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. Methodology

Manylion cyswllt ar gyfer y Bwletin ystadegol

Fred Norris
Financial.Inquiries@ons.gov.uk
Ffôn: +44 (0)1633 456109