Unfortunately I don't know enough about it to offer an opinion on this specific case. I only know it will pay only part of the promised benefits. But from other pension plans I've seen, this happens because the plan is undercapitalized. This usually happens because of:

a) missing employer contribution to the fund on every paycheck b) mismanagement of the fund

The second point can be very varied and only limited by imagination, from embezzlement to government action. I've seen laws passed in the past passed about being able to take a loan on certain public pension funds without interest, which shows the complete lack of understanding about how these pensions are supposed to work and the actuarial math behind it.