Pension Reform - Inverted Pyramid

Everybody is griping about how pensions are draining public troughs dry.  Everybody is trying to blame the unions.  They are partly to blame, but not exclusively.  See, unions do NOT set up their benefits unilaterally.  It's a joint decision by both labor and management. 

The problem is that traditional pension plans (defined benefit plans) promise a predetermined payout upon retirement regardless of stock market performance, number of people participating, etc.  The underlying issue and principle is that this type of pension plan depends on a GROWING BASE to fund the retirees or people drawing money out of the plan.  The government is not hiring new blood, and the retirees are multiplying like crazy.  The base is shrinking.  Viola.  Inverted pyramid.  Top heavy.  The system will collapse.  It's that simple. 

Social security also has the same problem.  Back when it was set up, the program incorrectly assumed that the population would always grow and people contributing into the fund would also grow at a rate faster than people collecting out of the fund.   Guess what.  People are not having 6 kids anymore.  Again, we have more people collecting than monies going in, and payment promises have already been made.  Top heavy.  The program will collapse.  It's that simple. 

If ever an argument for granting illegal immigrants citizenship it would be to make them all legitimate and pay into the social security system.  They are the only base of people multiplying like rabbits.  However, contributions would depend on employers honestly paying into the system and we know how much cash slipped under the table rules the business world. 

Bottom line:  When pension and other programs were set up they assumed a regular pyramid of constant growth and an expanding base.  They had no idea or did not even consider a contracting, shrinking base.  I thought the esteemed financial wizards were smarter than that.  Guess not.