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UK pension funds switch to bonds

UK – Pension funds invested a net three billion pounds (4.3 billion euros) in UK government bonds in the third quarter of 2003, according to new data.

And the Office for National Statistics also said that pension funds disinvested 3.1 billion pounds of UK company securities in the period.

Total institutional net investment in UK government bonds, or gilts, rose to nine billion pounds, compared to 4.8 billion pounds in the second quarter. A year ago there were net disinvestments of 1.8 billion pounds.

Total net investment by institutions was 19.6 billion pounds in the third quarter, 11 billion pounds higher than the second quarter.

Investment in short-term assets, UK equities and other assets rose by 2.5 billion pounds, the ONS said.

At the end of 2002, the total size of the UK institutional market was 1652.5 billion pounds, down 10.1% on 2001.

Net investment by self-administered pension funds fell by 1.8 billion pounds to 2.7 billion pounds, the office said.

Net contributions to funded occupational pensions rose 27% to 40.6 billion pounds in 2002, up from 31.9 billion pounds in 2001.

The ONS is currently reviewing how pension statistics are compiled. It said it plans to publish a report in early 2004 estimating the scale of misreporting of data. The office and the Department for Work and Pensions have agreed to publish a guide to pension contribution figures – which will also be available next year.

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