I am not dismayed that the money in pension schemes paid by council tax paid by the likes of you and me, are consolidating their fund management around 6 rather than 8 pools.

I read this in the Financial Times and agreed both with the Government and LGPS in rationalising the way funds pool their money and the impact of pooling

The UK government said earlier this year it had gained “valuable learnings” from Canada’s model of very large, professionally run pension funds, whose key strength included “in-house investment management” which enhanced control and reduced reliance on outside managers.

Necessarily, the mighty pools of LGPS become so by good management of money and hence consolidation of less efficient pools

The FT’s analysis found that Access had mandates with 20 active fund managers at the end of June, while Brunel had almost 30, across multi-manager strategies.

Neither Access or Brunel are continuing. What is happening is that mandates are transferring to new pools , these pools will become less a “manager of managers” and more direct managers

The consolidation “ultimately creates a challenge” for UK investment managers, said Iain Campbell, a consultant at Hymans Robertson, adding that the government had “made it clear” that it wanted pools to eventually manage more LGPS assets in-house.

There is good reason for this, as was explained by Toby Nangle , formerly a fund manager and now a commentator who explained how – when scale is sufficient – pools can improve performance through direct investment (especially of private market investments). This is the strategy and it is a strategy that necessarily diminishes the assets under the management of fund management. Even a fine Scottish fund manager like Baillie Gifford cannot expect to see assets rise as they are now as LGPS assets rise.

There is another matter to consider. Richard Dines of Reform may not be powerful in parliament but Reform now represent several councils and hence several funds. They are showing they want to exercise control over costs within LGPS. LGPS can either move Reform’s way and to large scale selling down of actively managed assets and purchase of indices or step up to be counted through more compelling management of money within pools.

The numbers of outsourced mandates offered by now defunct pools (see above) suggests that Torsten Bell’s strong words earlier this year that consolidation of pools must happen by the end of this year was sensible. LGPS has run out of time and is now up against pressure from Labour in parliament and Reform in the Town Halls.

The final and awkward truth for LGPS delegates from Nangle’s talk , is that the private markets strategies in the elliptical dotted shape adjacent to 4-5% “median cost” were fund of funds (dots) while the strategies in the rectangular boxes (where the costs were 1% or less) were directly invested (triangles and squares).

The reality is that outside the bubble, we need value for money from the LGPS that now has more than £400bn in it. We cannot afford to be paying more than we need and we have learned this from my friend Chris Sier. He will be pleased to read from his sick-bed that the work he has done in ClearGlass is seeing action.

I hope that Baillie Gifford and other good active fund managers will find a way to remain relevant but as a council tax payer, I have no reason to support inefficiency.