A version of what you suggest has been the law since ERISA was passed in 1974.

The problem is what to do if investment performance doesn’t meet expectations, lifespan increases, or future assumed yield decreases. Generally companies had to pay enough to be back to even within seven years. Newspapers sought the right to have thirty years to fully fund. McClatchy was larger than Congress was comfortable with and found itself unable to pay the required fraction of the difference between the NPV and finding amount. Hence, it declared bankruptcy.

There's huge conflicts of interest with defined benefit pensions. It wasn't until PPA of 2006 that standards really tightened up. But imagine being an employer in 1970s. Instead of paying people higher wages, you could create a pension plan on paper, pay the plan however much you wanted (there was wide discretion on what assumptions could be used to calculate the cost of benefits), and get the recipients of the benefits to work for you today for an unknown benefit tomorrow.

If you're one of the decision makers, you're likely to be on the older side. So you're likely to start receiving the benefits soon anyway, and so any underfunding wouldn't affect you, since there would be a couple decades of money available before it started to run out. So the decision makers can easily choose to shortchange those 20 to 40+ years in the future in exchange for enriching themselves in the now (1970s, 80s, etc).

Seems like society should've seen it coming. Of course, if everyone kept having 4 kids, maybe those fantasy numbers could have been met, but who has the ability to predict numbers decades in the future?

Please do some more research on this topic before making policy demands that are already current law. Pension obligations are what took the company down-- they were behind on paying into the pension fund.

I think the commenter was pretty explicit about their lack of knowledge on the subject. Their viewpoint is logical from first principles, but it seems like it's off-base in the facts.

Would you mind elaborating a bit more on the 'current law' aspects? I think that would be more constructive than: 'do some more research on this topic before [commenting].'

I also know nothing about this, but from reading the article and your comment, I'm confused how they arrived at this point of being $805 million behind in their pension obligations if current law is solid on this point. Maybe it took them down in the end, but shouldn't the intervention have happened far sooner?

Not OP but to a certain extent this is an inescapable part of finance and economics. If inflation or interest rates shift the payee might not have enough money to increase their contributions. The rule of thumb is usually that when the stock market is up the bond market is down. Well, the stock market is in the midst of the longest expansion in US history. Nobody knows when it will shift in the other direction.

Here's more info on US pension law, the fight in the Senate was over whether to give the newspaper more time to "catch up" their payments to the pension fund.

https://en.wikipedia.org/wiki/Employee_Retirement_Income_Sec...

You are assuming these are defined-contribution plans. These by definition self-fund, as what gets paid out is directly related to what gets put in and the fund's performance.

Problem pensions are defined-benefit, where regardless of the amount of inputs and fund performance, the payments are guaranteed. Even worse, most pensions in America assume 8% average annual return, which is absurd. The whole thing is a house of cards.

It's basically a way for a company to take out a loan and default on it with no liability. See GM, where they hooked employees with really fantastic deals and tore them up once they tried to cash them in