The people who put defined-benefit plans and policies in place assumed there would always be someone able to pay for them.

There would always be enough new workers to pay for retirees’ Social Security and Medicare. Benefits were raised on the assumption that the baby boom generation would produce a baby boom of its own. Oops. Birth rates near replacement levels, which we have now, are not enough. The ratio of workers to retirees is in inexorable decline.

General Motors would always be a big enough company to pay for the pensions and health benefits promised to hundreds of thousands of retirees. Turned out it wasn’t…

Defined-benefit policies assume a static society. But we live in a dynamic society, and defined-benefit policies cannot keep up with constant change.