Megan Mcardle walks through pension history:

The UAW, which represented Studebaker's employers (some of the highest paid in the auto industry, by the way), had not only allowed the company to stretch out its payments into the fund, but had arguably actually encouraged it, because the alternative was lower wages. Nonetheless, workers were devastated.

So, that gave use the Pension Benefit Guarantee Corporation (PBGC).

ERISA mandated that companies had to keep their pensions funded at all times--if a company had a shortfall, they had to make it up immediately, and no, we don't care if the union said it was all right. But this, it turned out, created a new problem. The assets in pension funds tended to fall precipitously during recessions. So, of course, did company profits. So the law demanded that companies put millions of dollars into pension plans just when they were least able. Pushing companies into bankruptcy wouldn't do anyone any good: the PBGC would have to make up the shortfall, the workers would get less (because the PBGC makes them take a haircut), and of course, the corporate shareholders would lose their whole investment.

Companies could have dealt with this problem by overfunding during boom years... But even if they wanted to do this (and I'm not sure that many did), there were structural reasons that they couldn't. Instead of requiring them to behave sensibly, the government required them not to.

Overstuffed pension plans were often an attractive target for LBO operators, who would "unlock" the cash (and pay it out to bondholders or themselves). Worse, they became a target of the IRS. An overfunded pension fund can, in slightly unscrupulous hands, be used as a tool for tax management: stuff the funds in during very profitable years, take them out later when you want them. The IRS takes a dim view of such maneuvers, and therefore essentially forces employers to stop contributing to overfunded defined benefit pension plans, or add new benefits.

Megan goes on to discuss proposals for shifting more to Social Security, pointing out that it carries all the same problems, but with greater risk. Read the whole thing.