Leading the debate

Marek Handzel recently caught up with Alderman Ian Luder – the Lord Mayor of the City of London – and found an individual championing the merits of financial education

Despite the many legislative changes to pensions over the last decade or so in an attempt by government to stave off the UK's looming pensions crisis, the whole area of retirement saving still appears to be in a state of flux.

This uncertainty can be boiled down to one omission on the part of our legislators, says Alderman Ian Luder – the 681st Lord Mayor of the City of London: They're all keeping their mouths firmly shut.

"It's not a debate that politicians seem willing to have," says the Lord Mayor, who is concerned that society is "sleep-walking" towards serious problems. He believes that the reality of increased longevity has not yet sunk into the collective consciousness and that not openly discussing the possible solutions to our changing demographics is both dangerous and irresponsible.

One of the reasons for the stonewalling, he accepts, is that discussing the issue means publicly acknowledging that some people are set to fare better than others: "Politicians don't like losers because they don't tend to be supportive of them. And the one thing that there is in this debate is losers.

"We're all losers in a way because at the moment we're assuming that our children will pay the enhanced pensions we're promising ourselves on an unfunded basis at a time when we're all going to live longer. But there will be a time when it just won't happen. So ultimately if we do nothing we're all losers, but in the short-term if you decide to do something losers emerge."

Tied in with the lack of a public discussion on pensions in the UK is the absence of any real financial education, something close to Alderman Luder's heart. His 'theme' for his year in office is 'improving the financial literacy of
the nation'.

"You can't blame Mr and Mrs. Smith for not saving enough," he argues – it is due to our collective failure to provide decent financial education that has harmed pension saving.

Living longer
The issue of increased longevity is one which troubles the Lord Mayor. As he points out, the most expensive time of life is usually extreme old age, when people have to fund the costs of personal nursing care – and it is a stage of life that is becoming more common. This, he says, poses a moral dilemma for families as well as society.

Take a retired couple who enjoy 20 years of retirement together and then one of them becomes infirm before the other: what is the moral right of the one who becomes infirm first to consume joint capital?

"In five years they can consume an awful lot and then pass away and leave the survivor with a period of sole life with a living standard materially depleted because of the consumption of joint capital." And on current saving level projections, the taxpayer may be forced in the future to pay for a generation of impoverished and frail octogenarians and nonogenarians.

The City's representative
One of the Lord Mayor's roles is to represent the City of London abroad as well as promote business links and associations. He travels on average 100 days in the year, usually 92 overseas and eight to other parts of the UK.

Thankfully, he says, the City's reputation is far higher abroad than it is here: "We like to denigrate ourselves here in the UK and we're succeeding."

In times like these, the presence of someone in the City who has no need to court popularity and is free from vested interests is crucial.

"When I talk to international bankers I don't need to court some cheap publicity by blaming them. But I have told them that they need to come up with input on how regulation of banks should change.

"Of course people have concerns about what went wrong, but we are where we are. Let’s move forward. It is a challenge, but one that I relish."

Which is just as well, because Alderman Luder always wanted to be the Lord Mayor of London ("I'm one of those sad people"). First elected to a local authority in his mid-twenties, he has been involved in public life ever since in one way or another, acting as a councillor for Bedford from 1978 to 1999, and then becoming an Alderman in 2005 and Sheriff of London in 2007.
So why the desire for public service? “The dice fell well for me. I had opportunites and I wanted to give something back to society and doing this is how I do it.”

Future
As the role can only be taken for a year at a time due to the demanding travel schedule, Alderman Luder will leave his post and the regal surroundings of Mansion House in November, by which time he imagines he will be happy to hand over the baton.
He says he is too young to retire but that he will take a well-deserved break and consider his next steps: “Four days activity a week would be rather nice. In an ideal world, I would like to offer something in the private, public and charitable sectors.”

- Pensions Age April 2009