The ONS said the downward trend could have been caused by several factors, such as companies expecting more profitable returns on overseas shares as well as changes in pension fund regulations.

It but noted one significant change in regulation was the introduction of accounting standard FRS17 in 2000, which required companies to calculate the surplus or deficit on their defined benefit pension schemes each year and disclose any deficit as a financial liability in their accounts – noting this may have caused company pension funds to make lower risk investments in products such as corporate and government bonds, moving away from UK quoted shares.

This follows the government’s Mansion House Reforms announced in July – aimed at encouraging pension funds and insurance companies to up their allocations to UK shares as well as stimulating productive finance.

Pensions and Insurance sector percentage ownership of UK quoted shares, 2022

Commenting on the data, Cara Spinks, the head of insurance consulting at actuarial consultancy OAC, said since the divestment had been a trend since the 1990s.

She said: “It in part reflects regulation which encouraged pension and insurance funds to transfer into investment products like corporate and government bonds, but also the better returns that have been on offer from the US stock market.

“With UK stocks continuing to underperform, it is perhaps unsurprising that these companies which have a fiduciary duty to protect their members’ savings have shifted capital away from UK shares.

“The chancellor and the prime minister appear committed to re-invigorating this sector’s investment into UK business and infrastructure so it will be interesting to see whether their efforts – and presumably that of a Labour government if elected in the next year – will shift the dial.”