Arguments: People should receive their entire pension upon retirement

ByRoel Becker

Arguments: People should receive their entire pension upon retirement

The following motion was the topic of the second-round debate of the Nijmegen Open 2020.

Infoslide: A lump-sum pension payment is when workers receive their whole pension at the start of their retirement. A staggered pension payment is when they are paid their pension monthly.

Motion: THW allow workers to make a choice between a lump sum pension payment and a staggered pension payment.

Round 2 – Nijmegen Open 2020

This motion review is partly based on the discussions and testing that was performed within the CA team of the Nijmegen Open: Fabian Beitsma, Gigi Gil, Hadar Goldberg, Lucy McManus, Parth Pandya, Marta Vasić & Roel Becker. I thank all co-CA’s for their hard work. Obviously, only I am responsible for any mistakes.

General

I picked this motion for a review for two reasons (other than pensions being the most fascinating thing on earth). Firstly, when I compare the (excellent!) debate I saw and discussions of the other debates I heard with the discussion we had in the CA team and my own ideas about the motion, I feel there are a number of dimensions most teams did not touch upon. I hope that makes the motion review more interesting for readers. Secondly, and more importantly, I believe this motion has quite some didactical value as it requires teams to be explicit about argumentation that normally implicitly wins them debates: why certain groups are more important than others and in characterizing what society looks like.

Most argumentation can be placed under two clashes: what happens to an individual and what happens to the pension system as a whole. I will briefly walk through the most important lines of argumentation and then show why weighing and context seem decisive to me.

Before we start, it seems useful to reiterate how most pension systems work: during your working life, you or your employer pay(s) a periodical amount of money to an organisation (pension fund). That fund invests the money and when you retire, you get paid (mostly a monthly amount for the rest of your life), based on what you paid during your working life and the interest it accumulated.

In terms of the set-up and a model, the opening government needs to be clever in terms of the amount they are going to pay out (and opposition should annoy them about it). I recommend going with a sum that is based on your contributions (for example the amount you have generated so far). It might be tempting to opt for making an estimate of the sum you would receive during your life, but that, as the argumentation hopefully makes clear, leads you to two problems later: it is discriminatory and pension funds go bankrupt.

What happens to individuals?

On prop, I think there are roughly three lines of argumentation you can use. The first one is principle: you can argue that you paid for your pension and that you therefore have a right to the money, and also the way you get the money. This line might be most powerful when you combine it with the following two lines of argumentation. I personally do not think it is particularly strong: pension systems by definition place a lot of restrictions on the way you can access “your’” money. On top of that, we will see in a moment that opposition might be able to show very significant harms to third parties, which probably outweigh the principle.

The second line on prop is that this policy guarantees you actually get a decent amount of your pension contributions. Since you get paid until you die, people who die sooner get significantly less money. This is especially unfair, since vulnerable people on average live less long. This policy has a balancing effect. (A feminist opp might flip this argument and point out that men live shorter too and the status quo in that way marginally compensates for the pay gap.) The third line is that a one-time payment is more useful for many people than monthly contributions. It could allow you to buy your house or pay off your mortgage, or pay for health bills, or for your children’s education or invest money in their company. 

The standard opposition line is that people will not be spending their money properly. You can use the general choice analysis here: people will either make the wrong choice because they are not fully rational, or because they are pressured into making the wrong choice. I think this is made more interesting by looking at the specifics of pensions: no one knows how long they are going to live, finances are complicated for many people, etc. 

The strongest way to make this argument is by asking people what happens when people get the lump sum and then run out of money. If proposition is going to leave them to their own ends, especially in countries with little safety nets, you can point out many people will be treated horribly. If proposition is unwilling to bite the bullet, you can explain people have a direct incentive to spend it, because that means they can rely on the government again. (I feel the proposition should choose the middle road and explain that you sustain people to a basic level, but nothing more than that).

Interesting additions that can work for both sides (and can for example work as an extension) are the option of early retirement (because it is more or less attractive? And is that a good thing?) and the specifics of investment (might other funds be better equipped and why? Are you going to get more competition between pension funds and alternatives people can now access?). You can also think about what happens when funds need to adjust their monthly payments (for better or worse): are you going to change the already paid sum? If no, how does this alter decision making? This is also where the context kicks in: the team that paints the most persuasive picture of how people are going to spend their money is likely to win. 

Pension system

The second clash is what is going to happen with pension funds. On prop you can argue they have an easier time, since they can now “buy off” people, rather than be forced to keep paying them until they die. This is especially beneficial as many funds underestimate people’s life expectancy (and governments have not raised the pension age sufficiently), meaning they are facing a big shortage of money. 

On opposition, you can claim this policy will ruin the model of pension funds: under the Status Quo, funds keep earning interest on the sum of your payments, even while paying you back. Under the model, that is no longer the case. This means there will be less pension, or still working people have to pay more. This also runs the risk of getting into a prisoner’s dilemma, where more and more people get a sum to get out of a failing system.  

Balance & Context

After these arguments, the debate really gets fun. There are quite some debates in which both sides aim to solve the same problem: in military intervention debates, both sides want peace and stability. In economy debates, both teams want prosperity, etc. The fun thing about this debate is that in almost all cases, both sides will win and lose some groups: there are some people who are going to be saved by this plan and some people for whom it will play out horribly. It then comes to balancing these groups: explaining why the groups you help are more important than the groups they help. 

The second important aspect of the debate is context. Debaters are very good at predicting the future: what will happen when we implement this motion? They are less good at describing the world as it currently is (what does society look like and how do people make decisions?). In better debates, it is often that context that is decisive, since both teams can show great mechanisms. The only way in which a team can then show that a certain mechanism is more persuasive than another, is by showing the context it is based upon is more reliable. This debate forces you to do so very explicitly: can elderly people decide upon this properly? How many people are going to take up this option? What do pension funds look like? This nudge towards explicit weighing and context also work great from the second half. In my opinion, this nudge towards explicitness, also makes the debate very suitable for a training session.

Roel Becker
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Roel Becker is a debater of the Leiden Debating Union. He has reached the finals of the European Debating Championships and the semifinals of the World Debating Championships, among others.

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Roel Becker administrator

Roel Becker is a debater of the Leiden Debating Union. He has reached the finals of the European Debating Championships and the semifinals of the World Debating Championships, among others.

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