Over the past few decades, there's been a huge shift in the corporate world away from providing employee pensions toward 401(k) plans and other defined-contribution arrangements. Yet despite the successful shifting of risk from employers to workers, existing pension obligations still pose a substantial threat to earnings at many companies.

A $500 billion problem
A recent blog post from The Wall Street Journal took a fresh look at what's been a long-standing problem within corporate America. Ever since the financial crisis, private pensions have struggled to produce the returns that they need in order to stay on pace to provide for their long-term liabilities down the road. With benefits extending for decades into the future, companies have time to remedy shortfalls, but every dollar that goes toward workers' benefits is a dollar that's not available for expansion, stock buybacks, or dividend payments to investors.

In particular, over the past five years, pension funds among the 3,000 largest companies in the U.S. have gone from being almost fully funded at the end of 2007 to just 75% funded by last month. Among those with shortfalls of $10 billion or more were General Electric (NYSE:GE) and Boeing (NYSE:BA). More broadly, with $1.32 trillion in investments offset by $1.82 trillion in pension liabilities, the 100 biggest pension plans face a $500 billion shortfall.

Under such circumstances, you might expect pension plans to get more aggressive in their risk-taking, choosing investments that have the potential to grow substantially to cover the shortfall without the need for further contributions from employers. Yet at least so far, pensions are moving in the opposite direction, adding bond exposure even with rock-bottom interest rates.

Giving up
Even at low interest rates, buying bonds makes some sense for pension funds. The benefit for pension plans is that owning bonds allows fund managers to line up assets and liabilities more directly. For instance, if you know you'll need $1 billion in 2027 to cover pension payments, then buying $1 billion in bonds that mature in 15 years is the perfect way to make sure you'll have that cash when you need it.

From the corporate perspective, buying bonds at this juncture is essentially an admission of defeat. By locking in low rates with a large portion of your pension assets, you eliminate any real chance of long-term growth. Instead, managers are accepting weak returns in an effort to better define their obligations and avoid getting whipsawed like they did in 2008 and early 2009.

Cutting risk seems to be popular, as many companies have made big bets on bonds. The Journal post lists auto giants Ford (NYSE:F) and General Motors, which have some of the largest pension obligations among U.S. corporations, in its list of companies that boosted allocations to bonds substantially in 2011. Lockheed Martin (NYSE:LMT) and United Parcel Service (NYSE:UPS) have made similar moves with their bond portfolios.

The next move
If bond yields start to rise, then the value of bonds within pension fund portfolios could drop dramatically, making shortfalls look even more severe. That in turn will put corporations in an uncomfortable situation: Take big earnings hits to cover shortfalls, or negotiate with workers to reduce pension benefits.

As a result, workers need to prepare for what could be ongoing pressure from employers to make concessions on pensions. As we've already seen in the public pension arena, public opinion isn't overwhelmingly on the side of workers in pension debates, as struggling workers who've already seen pensions disappear have little incentive to make further sacrifices on behalf of retirees and older workers with pensions. Those who expect to live solely on pension payments could find themselves in for a shock if bond bets turn sour.

Rely on yourself
Unfortunately, the days when you could rely on your employer to protect your financial future are over. Your best bet is always to take control of your own assets and save up in order to put yourself in the best position to thrive no matter what happens.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.