The prospect of a pension to supplement Social Security in old age is slipping out of reach for millions of Americans.

For a generation, the proportion of Americans working in jobs where they were earning credits toward a possible future pension had been rising. But during the last decade, this trend has reversed. It is now falling because some employers are not setting up retirement plans for their workers and other employers are curbing existing plans to save money. This imposes a sharp limit on how many future retirees will ever get a pension, according to pension experts.

The causes, they say, are many: Employers have less money to put into pension plans because of the economic slowdown and a decline in U.S. productivity growth; the labor force is increasingly concentrated in service businesses, which are less inclined and less financially able than large manufacturers to offer pension plans; expanding regulations and paperwork have made pension plans too complicated and expensive in the view of smaller employers; and a weaker trade union movement has been less able to obtain pension plans in collective bargaining.

The pension system has other problems as well. The benefits are low even for many who do qualify. Few plans include annual cost-of-living increases to offset inflation. Some people "cash out" pension rights before they retire and use the cash for something else, leaving themselves with no pension.

Finally, the government insurance system backing up private pension plans that collapse or fall short of their obligations is staring at potential liabilities beyond its capacity.

The long-term result of the fact that a smaller proportion of the work force is earning pension credits will be that no more than 50 percent of the future elderly, and probably far fewer, will ever qualify for a pension, said Don Grubbs, a pension actuary here, and many retirees will find their benefits quite small. As used here, pensions mean employer-financed savings plans and profit-sharing plans as well as traditional pensions.

Some experts say the 50 percent figure is too low; some say it is too high. But even the most optimistic projections foresee millions without pensions in old age, depending primarily on Social Security.

That will create tremendous pressure for Social Security benefit increases down the road, although Social Security was never intended to provide much more than half the income the average person needs in retirement. People's savings may help, but in 1984, half the retirees had a net worth (aside from their homes) under $20,268.

Karen Ferguson of the nonprofit Pension Rights Center here said that "under current projections, there will always be millions who will have no pensions. We've got a private pension system with $2 trillion in assets that doesn't make sense. It does very well by some people, and it's cruelly unfair to others."

No law requires private employers to offer pension benefits. But private pension coverage grew dramatically from 1950 to 1975 as employers increasingly created plans for their workers. Encouraging the growth was high productivity, favorable tax treatment for corporate contributions to worker pension plans and a 1948 National Labor Relations Board ruling guaranteeing that unions could negotiate for pensions as part of the collective bargaining process.

Over that period, Assistant Labor Secretary David George Ball said, the percentage of private sector full-time, year-round employees in jobs where they were earning credits toward a pension roughly doubled, to 52 percent.

This, plus the growth of government-employee and military pensions, is the main reason why the Census Bureau found that the number of elderly receiving a pension from a former employer reached 8.4 million by 1987, or 30 percent of the aged population, plus another 4 million under 65. The average was $640 a month.

Citing such growth, Ball called the pension system "a success story" for millions.

But the Employee Benefit Research Institute recently reported that the share of all civilian non-farm workers who were earning credits toward a pension dropped from about half the labor force in 1979 to 46.1 percent in 1983 and 44.2 percent in 1988. That means 57 million workers weren't earning credits.

A Social Security Administration study found that most of the drop was among younger workers, primarily young men.

And increasingly, all sources note, employers are shifting from traditional plans, where the employer puts in all or most of the money to pay for pensions, to plans such as the 401K savings plan, where the worker puts in some or all of the money, which costs the boss less and usually provides lower benefits.

Experts expect that for a while, the ratio of elderly retirees receiving pensions will grow beyond the current 30 percent, reflecting the upward surge in pension-covered jobs in 1950-75 and a recent law reducing to five years the time a person usually must work in a firm's plan to "vest" -- that is, earn a permanent right to some future pension.

But the number of recipients will level off eventually and perhaps even start going down again because of the decline in workers earning credits on the job.

That decline, said Michael Gordon, an attorney who helped write the landmark 1974 Employee Retirement Income Security Act regulating employer-sponsored pension plans, results in part from the "slow-growth" economy since the mid-1970s. "When there was growth, there was money to burn on pensions," he said.

He also said most of the new jobs in the economy are in service industries where the typical firm is smaller, poorer and seldom has a union present to fight for a pension system.

Sylvester Schieber, director of research and information for Wyatt & Co., a benefit consulting firm, said the earlier fast-growth era involved successful collective bargaining for pensions by strong unions in huge and profitable industries, often manufacturing. Further progress requires getting plans adopted by low-profit small firms such as, Schieber said, "Joe's Machine Shop with 20 people." But the small firms "just don't have the bucks," said Sharon Canner of the National Association of Manufacturers.

The Social Security study found that in firms with fewer than 10 employees, only 11 percent of the full-time workers were earning pension credits on the job in 1988. The figure rose to 67 percent in firms with 250 or more workers. In non-union firms, two-fifths of full-time workers were earning credits; in unionized firms, 75 percent.

Changes in pension laws made them more costly for employers and therefore less inviting. The 1974 legislation and later laws imposed tougher funding standards for pensions. They imposed the five-year vesting rule (previously vesting could take 30 years or more), gave a widow or widower the right to inherit at least part of a spouse's pension and required better balance between the pensions for low-paid and high-paid workers in a company.

Howard Weizmann, director of the Association of Private Pension and Welfare Plans, with members from the nation's 500 largest firms, said the pension system is threatened by the fact that Congress, legislating almost yearly since 1974, has created an incredibly complicated mass of rules, frightening to the average employer who cannot afford a flock of accountants.

"They shoot you in the foot and then they complain you can't dance the polka," he said. "I see a lot of people who would adopt plans look at the 350 pages of regulations on how to make sure your plan is not discriminatory {against low-paid employees} and get discouraged."

Weizmann contends Social Security's benefit formula, tilted to the poor, takes care of the income-drop problem for many low-income workers. But the Pension Rights Center's Ferguson says this is not true for average-income workers, millions of whom have no pensions.

Coverage is not the only problem.

Benefits for many recipients are low -- sometimes because firms set them low; sometimes because a firm's benefit formula disproportionately favors long-term or higher-paid employees, and sometimes because people switch jobs frequently and vest at only one, accruing minimal benefits.

In most situations, credits earned from one employer cannot be transferred to another plan if the worker changes jobs. So a person working at nine different firms for four years each and one firm for five years would vest for a pension only at the last, even if all the firms had pension systems.

Many workers leaving jobs before retirement age get a lump-sum payment in lieu of future pension rights, but instead of rolling it over to another retirement plan, 80 percent "cash it out" by paying income tax and a penalty. They can spend the proceeds as they wish, but the pension is gone.

While Social Security and federal employee pensions are adjusted annually for inflation, only 9 percent of private companies have a formal plan for any increases, according to a Hay/Huggins Co. study. As a consequence, someone who retired in 1968 with a $75 monthly pension can still be getting $75.

A government insurance plan, run by the Pension Benefit Guaranty Corp. to pay benefits to retirees whose pension plans go broke, could face up to $30 billion in payments if several dozen seriously underfunded plans collapse. Congress has just raised the premiums that employers pay for the insurance by $120 million a year.

Some companies have deliberately junked pension plans in order to skim off any surplus not needed to pay for benefits already earned; and there are cases of pension-fund looting by dishonest trustees.

What has been suggested to improve coverage, aside from simplifying paperwork?

A Grubbs proposal requiring all employers to provide pensions was endorsed by a 1980 presidential commission, but there was no action. One change suggested by Ball would allow firms with up to 50 workers, instead of the current limit of 25, to adopt easy-to-administer payroll-savings plans into which a worker can put thousands of dollars of wages, tax-deferred.

Another would extend five-year vesting for employer-financed pension plans to some plans that can now wait 10 years. Ball also favors curbing "cash-outs" by requiring automatic rollovers of lump-sum payments into Individual Retirement Accounts.