ok.. there are two basic types of pension. The first type is the final salary scheme (sometimes known as a defined benefit scheme) and the second is a money purchase scheme (usually known as a defined contribution scheme). Almost everyone had the first type until the late '90s.
By the late '90s pension trustees, actuaries, investors, governments and just about everyone was becoming worried about what they called the "pension timebomb". Essentially this was the babyboomers coming up for retirement. Suddenly there was going to be a large % of the population in retirement and even worse from the perspective of pension trustees, medicine has taken such strides forward that people are now living longer. So there would be more people crossing into retirement than ever before and they'd each be drawing their pension for more years than ever before. This didn't just affect Britain, it was a major problem for every developed country in the world.
The problem is that to pay these pensions the money must be earned somewhere: it is not just a total of contributions paid in during the working years handed back in regular amounts during retirement until death. A group of people need to produce things at a profit for the money to be made to keep funding the pensions. It arrives in the pension fund as a series of share dividend payments are bond interest payments. The old national insurance/ state pension system was different in that those who were working had their contributions spent on those who were retired whilst trusting that the next generation would keep them in their retirement in the same way. But either way, the young have to keep the old.
By transferring to a money purchase scheme what happens is that your money gets invested as it did in a final salary scheme but you get the benefit of it at the end (when you retire your investments get cashed in and are used to buy an annuity which is a type of government bond which pays out at regular intervals until you die). BTW annuity rates fell badly meaning you got a smaller return so the government changed the law sometime around 1997 so that you could choose when to buy your annuity and it could be any time from 65 to 75 years of age.
The major downside of money purchase schemes is that if your investments fall in value then you get a smaller pension. With final salary schemes, the employer has to top up the pension when there isn't enough money to meet the commitments to current pensioners. The investments in both schemes are broadly the same, but the future pensioner carries the risk in a money purchase scheme whereas the employer carries it in a final salary scheme.
Obviously as an employee it is better to be in a final salary scheme. However, most private sector companies have now switched to money purchase and closed their final salary schemes with various bribes and threats to make their employees accept the migration. For many companies, it was not about saving cash: it was the difference between survival and going under.
In the case of teachers and other public sector employees, the employer is the state and the state is funded by the taxpayer. The tax payer is both private individuals and private companies. That means the average man in the street and tax paying companies will be subsidising teachers pensions.
Since 2006 the financial world has turned on its head. The credit crunch actually started that year and pensions would have even felt under strain back then. It wasn't all to do with "greedy bankers". It was much more complicated than that but in essence it all started to go pear shaped when the US economy took a down turn and suddenly the people who'd got home loans they could barely afford in the good times started to default on their repayments. After that things were a mess and everything came tumbling down like a tower of cards.
People were worried in 2006 but no one envisaged the carnage that ensued culminating in the near collapse of the whole financial system in late 2008.