NEW YORK (FORTUNE) - It really is over for the corporate pension. Now that IBM has opted out, telling employees last week that their pension benefits will be frozen in 2008, it's hard to see what's to stop every last American corporation from preparing its eventual exit from the pension business. Lots of reasonably healthy companies -- Verizon, NCR, Lockheed Martin and Motorola, to name a few -- already have.

This phenomenon, along with the more dramatic cases of companies going bankrupt and defaulting on existing pension commitments (think United Airlines), has gotten tons of press, most of it of the "ain't it a shame" variety. But the real shame may be that we ever put so much faith in such an inherently unstable, unfair and economically perverse means of providing for retirement.

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The corporate pension has been around since the 19th century, but really came into its own in the United States in the years just after World War II. General Motors president Charles Wilson was its most visible champion, creating a company-run pension plan in 1950 over the initial objections of the United Auto Workers union because he believed it would improve employee relations.

But there were problems with Wilson's approach that, while they didn't seem like a big deal in 1950, were to loom large decades later. For one thing, the Wilson way assumed that lifetime jobs with big, pension-granting corporations were the American norm -- which ceased to be the case decades ago.

For another, it failed to foresee that pension commitments could become a heavy burden for companies (among them Wilson's own General Motors) forced by competition and changing consumer demand to get smaller or at least leaner.

If GM had simply set aside all the money it put into its pension plan over the decades in individual retirement accounts for its employees, it wouldn't have this problem. Some GM retirees would be worse off than they are under the existing pension plan, but prospects for current employees (and potential future employees) would be far better.

That's the problem with pension plans that promise a specific benefit in the future -- they amount, pension consultant Keith Ambachtsheer says, to a contract between current and future generations, and those future generations aren't represented at the bargaining table. As a result, they get stuck guaranteeing the retirement income of their elders while receiving nothing in return.

When succeeding generations are bigger and wealthier than the ones whose retirements they must help fund -- as is the case in a growing corporation or in the United States since the launch of Social Security -- this isn't much of a problem. But it's no longer the case at GM, and may no longer hold for the U.S. as a whole a few decades down the road.

So what's the alternative, when it's also clear that many otherwise productive members of society are incapable on their own of setting aside enough money and investing it wisely enough to fund a comfortable retirement?

Toronto-based Ambachtsheer has been thinking about this harder than just about anybody else over the past few years (a sampling of his writings can be found on the Web site of the International Centre for Pension Management at the University of Toronto's Rotman School of Management) and he has become a big believer in individual retirement accounts that are aggregated into what he calls "buyer's co-ops."

That is, the money belongs to the individual, but the choices of how much money to set aside and how to invest it are at least partly in the hands of professionals who aren't in the employ of a for-profit mutual fund company or brokerage firm. The closest thing to such a co-op currently in existence in the United States is TIAA-CREF, the retirement fund for academic, medical, cultural and research workers. But more and more corporations are now approximating the buyer's co-op model by reinventing their 401(k)s as paternalistic organizations that automatically set contribution percentages and investment choices unless employees opt out.

That still leaves the majority of Americans who don't happen to be professors or employees of especially enlightened corporations. To help them provide for retirement, we could move to a system like Australia's, where 9 percent of every worker's income (up to a limit similar to the wage ceiling on Social Security payroll taxes) is automatically funneled into retirement accounts managed by organizations akin to Ambachtsheer's buyer's co-ops.

That's sort of what President Bush was proposing last year with his Social Security private accounts -- but those accounts were relatively puny, the president was unwilling to come clean about the true costs of his plan, and Congress in its wisdom (and fear of the AARP) chose to do nothing.

A long-cracked pillar of the American retirement system is crumbling, and not nearly enough is being done to build a replacement.