Other countries manage to maintain actual defined benefit pensions for retirees, some of which are fairly small countries with modest economies, Chile for instance. I’d assume they’re exercising fiduciary responsibility and do not permit gaming the system as is apparently so common with municipal and state pension systems.
I’ve heard good things about Chile’s system, so your post inspired me to look at it in some detail. I’m not well-enough versed in things financial to summarize it fairly, but it looks like most current wage-earners invest in “AFP’s”, which look to me like standard investment mixes, from which they ultimately draw their retirement funds.
But there are government guarantees (which I guess correspond to “defined benefits”), although I’m not sure how much of those are being phased out, some as part of the previous “PAYG” public pension system Chile used:
“Government Guarantees
“Account holders who switched from the public PAYG to the individual account system receive a recognition bond at retirement that represents the value of their accrued rights under the old public system. The value of the bond is adjusted annually to changes in the consumer price index and provides 4 percent interest per year beginning on the date the worker enrolled in the new system. The bond is redeemed and added to the mandatory individual account when the worker retires, becomes permanently disabled, or dies. The bond cannot be redeemed at any other time. To date, almost no one has retired with a benefit entirely from an individual account. In addition, the government guarantees retirees a pension up to 45 UFs per month (US$1,813) if their annuity provider goes bankrupt.
“The two types of government-guaranteed benefits are gradually being replaced under the new law: the guaranteed minimum pension (MPG) under the capitalization system and means-tested (PASIS) benefits. The MPG has been paid to men aged 65 and women aged 60 with 20 years of contributions to an individual account and whose total income—pension from an individual account plus other sources of income—is below the minimum level set by the government.4 The MPG is a top-up subsidy that, combined with the retiree’s income, reaches the minimum level. For those who have exhausted their funds, the government has provided the entire amount. Retirees who chose the programmed withdrawals option and exhausted their funds by outliving their actuarial life expectancy could also be eligible for the MPG. Disabled workers must have had 10 years of contributions to qualify for the MPG.5 PASIS benefits were paid to low-income individuals who were either disabled or over the age of 65 and did not qualify for any other type of pension. The recognition bond, MPG, and PASIS have been funded by general revenues.”
For those interested, more details at:
http://www.ssa.gov/policy/docs/ssb/v68n2/v68n2p69.html