With underfunded pensions threatening to become the U.S. taxpayer's next multibillion-dollar headache, lawmakers are working on a long-term fix for struggling traditional retirement plans. 

But some experts fear any solution will hasten the decline of the very system it is supposed to save. 

Other experts say the old-fashioned fixed payout at retirement, called a defined benefit pension, is already going the way of the corporate gold watch; and the best lawmakers can do is ease its way out the door. 

Pilots at bankrupt US Airways have seen their pension benefits slashed twice in two years as the airline tries to compete with new carriers unburdened by traditional pensions. 

"I think almost everyone who knows anything about pensions, would agree that the train has left the station. Defined benefit plans are gone," said Richard Ippolito, former chief economist at the U.S. agency that backs corporate pensions. 

"There hasn't been a new defined benefit plan created in 15 years," Ippolito said. 

Until the 1980s such plans, which base payouts on an employee's tenure and earnings, covered most of the work force, but 401(k) plans now dominate, he said. The latter are basically tax-free savings plans for employees. 

Traditional pension plans still cover some 44 million U.S. workers and retirees. Hit by corporate failures, low stock market returns and low interest rates in recent years, their underfunding has skyrocketed. 

Some companies, like bankrupt United Airlines, say they can no longer afford the plans and are seeking to place them with the government agency that insures old-style pensions, the Pension Benefit Guaranty Corp. (PBGC). 

However, the PBGC itself is so deeply in the red -- with a deficit of $9.7 billion that could be nearly doubled by shaky airline industry plans -- that its own long-term solvency is at risk, raising the specter of a taxpayer bailout. 

Hoping to avoid such a catastrophe, both Republicans and Democrats are working on pension solutions. House Education and Workforce Chairman Rep. John Boehner, an Ohio Republican expected to be re-elected next month, says he will produce a pension reform bill for Congress to consider next year. 

Alas, pension expert Zvi Bodie says the kind of reform that is needed would likely accelerate the system's decline. 

"There is no way to fix this and preserve a voluntary defined benefit system," said Bodie, a finance professor at Boston University. 

Ideally, the government would make companies fully fund their pensions and fund them primarily with bonds, not stocks, Bodie says. But he says many companies would rather leave the system than do that, as it would mean setting aside more cash instead of assuming it will materialize from stock returns. 

Pension plan sponsors continue to hope that the stock market will go back up and magically erase their underfunding, Bodie said. "We are a nation of wishful thinkers." 

While Ippolito, author of a recent study on pensions published by the Cato Institute, thinks defined benefit plans are on their way out, he notes many companies cannot walk away from existing plans as they are subject to union agreements. 

He thinks Congress should put what's left of the system on a sounder footing by privatizing the PBGC, so pension insurance premiums would be market-based instead of set by law. 

Other analysts are more interested in seeing Congress try to preserve the traditional pension system. 

"I do believe it is worth saving," said Douglas Elliott, head of the Center on Federal Financial Institutions think-tank in Washington. 

Defined benefit plans remove two major risks from the employers: the risk that the employee will outlive his or her retirement funds, and the risk of poor investment performance, Elliott said. Defined contribution plans such as 401(k) plans shift those risks to the employee. 

"I will be shocked if there is not reform legislation passed in the next Congress," Elliott said. He thinks Congress may change the funding rules so companies can put more money in their plans on a tax-deductible basis in good economic times.