Fundamentally any retirement plan that doesn't involve canned food in a celler is pay-go because the retirees will be consuming resources from the economy they retired into rather than the one they were workers in.
Their retirement savings can be in public company stocks instead of government guarantees but that only works if there are people willing to buy those stocks (ex: younger people saving for retirement).
Exactly. A world where aggregate consumer demand shrinks year after year is a world where all asset prices slide forever. Retirement is simply not possible on any large scale.
That's only true if the economy doesn't grow i.e. productivity doesn't improve. If retirements are funded from returns on assets they scale with productivity. If they're funded by current workers they're bounded by the limits of population and wage growth.
There is a production side of the equation but also a demand side. Through robotics and AI, Toyota might get really good at making cars really fast with minimal human labor. But if the demand for cars drops every year, the value of Toyota will be like a melting ice cube. This will be true for all stocks actually, (except perhaps the firms that sell adult diapers) but not only stocks, but property as well. And probably bonds. Do we really think Japan is good for their 2060 bonds, assuming no debasement?
In a world with forever imploding consumer aggregate demand, there is no safe asset.
It breaks down if you think about individual firms like Toyota. But the macro picture is that humans are consuming less goods and services and due to that consumer demand drops. And that means the non-working population's needs can still be fulfilled by the proportionately-smaller working population.
Asset prices are just numbers. A retirement fund that invests in broad-based stock and bond indices will have returns that track the productivity of the entire economy. If the economy is producing more it means people are consuming more. If it produces less, people are consuming less. It balances out.
An extremely productive economy with 1/5 the number of consumers (and dropping) will have a cheaper stock index, even with improved productivity. Asset prices over the long-term are driven by cashflows. Hollowing out revenue while improving productivity still results in a lower asset price because your cashflows are smaller.
Productivity gains will also be swimming against the stream because scale advantage will deteriorate in all sectors.
Their retirement savings can be in public company stocks instead of government guarantees but that only works if there are people willing to buy those stocks (ex: younger people saving for retirement).