The thing is a social contract that can't actually exist doesn't matter. If we all agree to not work but still receive benefits we haven't made a meaningful social contract. Breaching that contract is probably the best thing to do. Also, its difficult to evaluate exactly what the contract is here: is it that we all agree to a welfare state (roughly speaking) or is it that in the event that it is possible to have a welfare state then we will have it? I think the latter is more reasonable.

>Pension levels would have to be lowered to the point where the elderly would have to come out of retirement and re-join the workforce to survive, despite a lifetime of making payments into the system and promises they'll be returned.

The way I see it the point you're making here is that since they put in, they deserve to take out, as their input was when the system was still working and the contract thus in place. And that's true to a degree, but people implicitly acknowledge of and take a risk when they contribute to these systems. Did anyone think that in the event of a massive famine (for an extreme example) that they will magically be paid back on their contribution? The decline of the working population is maybe not something they thought about, but it comes implicitly as part of a general acknowledgement that a given system only exists withing a certain interval of environments.

All this said, you didn't explicitly state that you believe this contract should be upheld at all costs, but that seems to be the only case where that point would be relevant in the first place.