Is a pension really that different from a 401k that your employer contributes to? My husband works for the state, and he contributes to his pension, as does the state. Seems pretty similar to me, just a difference in how it's paid off later. While state employee pensions have some problems where we live, mostly it's due to politicians not funding them correctly in better years, which is creating trouble now that times are leaner. If they had been funded correctly the entire time, there wouldn't be so many problems.
And I'd hardly call the wages my husband earns inflated, not by a long shot. His job, at least, doesn't pay all that well, and I know plenty of other state employees who don't earn anything all that special. The overpaid people you hear about are the exception, near as I can tell.