This is what worries me about most such pension systems[1] -- because they don't operate on an actuarially sound basis, but depend on there always being enough payers, they are prone to "evaporative cooling"[2], which can strike suddenly and without warning.
That is, as you keep goring a larger chunk out of newcomers, you make their alternatives more attractive e.g. occupations other than teaching, or teaching in other country. This looks disproportionately appealing to the biggest potential contributors. So each person that leaves means a bigger chunk you have to take out of other newcomers, and the process accelerates. So then you may have little warning before you reach the point where enough have left to make it bankrupt.
Unfortunately, it's an uphill battle just to convince people that pensions should required to be funded at all, i.e. they set aside the discounted present value of every future dollar promised, rather than "oh don't worry, we'll totes have enough rev by then!".
[1] i.e. pay-as-you-go or underfunded
[2] To explain the metaphor, "Evaporative cooling" refers to how the exits from the system are lopsided and change its average properties. For liquids, the particles that evaporate away have the highest energy per particle, leaving the average particle energy -- and thus temperature -- lower.
That is, as you keep goring a larger chunk out of newcomers, you make their alternatives more attractive e.g. occupations other than teaching, or teaching in other country. This looks disproportionately appealing to the biggest potential contributors. So each person that leaves means a bigger chunk you have to take out of other newcomers, and the process accelerates. So then you may have little warning before you reach the point where enough have left to make it bankrupt.
Unfortunately, it's an uphill battle just to convince people that pensions should required to be funded at all, i.e. they set aside the discounted present value of every future dollar promised, rather than "oh don't worry, we'll totes have enough rev by then!".
[1] i.e. pay-as-you-go or underfunded
[2] To explain the metaphor, "Evaporative cooling" refers to how the exits from the system are lopsided and change its average properties. For liquids, the particles that evaporate away have the highest energy per particle, leaving the average particle energy -- and thus temperature -- lower.