East Riding’s local authority fund has refused to be drawn on the future of its in-house management team, declining to say whether it would take on any pooled mandates for assets it currently runs internally.

The £3.6bn (€4.8bn) fund, which currently manages 77% of assets in-house, said last week that it was looking to pool assets with the Cumbria County Pension Fund and the Surrey County Pension Fund, creating a pool of £9bn.

Asked if the pooling could see East Riding’s in-house team manage mandates for other local authority funds within the pool, a spokesman for the administering authority would not be drawn.

In a statement to IPE, he said: “The intention of the proposed new entity is that it will have an internal investment management capability that will be further enhanced through the benefits of increased scale over time.

“This will enable East Riding Pension Fund to continue to use internal management for a large proportion of its assets, but also offer this option for the funds within the partnership that may wish to take advantage of it.”

The statement added that the arrangement would allow it to continue using external managers – in the case of East Riding, Schroder Investment Management – “where individual funds deem it advantageous to do so”.

A spokesman for Surrey County Council declined to respond to questions asking whether the collaboration would see the launch of a new entity regulated by the Financial Conduct Authority, or where such an entity would be based.

A report presented to Surrey’s pension fund committee in mid-September, prior to the current collaboration being announced, outlined seven options for its local authority fund to respond to chancellor of the Exchequer George Osborne’s call for significant cost cutting.

Options included no action being taken, greater collaboration through joint tenders or joint mandates, and a number of differing approaches using collective investment vehicles (CIVs).

The options outlined to Surrey’s pensions committee included the possibility of a vehicle run by collaborating in-house management teams, or an established pooling exercise such as the London CIV.

“However,” the presentation to Surrey’s committee added, “a compelling option is the creation of a new joint vehicle project, where one of the LGPS partners has substantial in-house capability.”

The meeting document also stressed the importance of any such venture’s reaching a sufficiently large asset base of at least £25bn within three years of launch.