There is a new normal when it comes to investing that is not being accounted for in the Utah Retirement Systems. Moderate portfolios these days are hoping for an annual gain of 5 to 7 percent. The likeliness that the URS will consistently earn 7.5 percent on a conservatively managed portfolio, as anticipated by its fund managers, is highly unlikely.

According to the Congressional Budget Office, the average return rate of pensions for governments in 2010 was 4 percent. If the state used more conservative numbers Utah’s $83 million deficit would be much greater.

Another thing worth noting is that self-managed pension funds can come with a number of hidden expenses, which could reduce the overall value of the fund as well. These expenses may include turnover and buy and hold costs, as well as taxes on the investments within the plan.

Would-be pension recipients need to take an active role in saving for their retirement years. One way to do this is to take advantage of employer savings options. In the state of Utah public employers can contribute up to 10 percent of an employee’s salary, 12 percent for fire and safety workers. If 6 percent is going to your pension, for example, be sure to contribute enough on your own to your defined contribution plan in order to receive the other 4 percent in employer match.

Another way to supplement your income for retirement is to save on your own, independent of your employer. Use retirement savings tools such as a Roth IRA. A Roth allows for you to contribute after-tax dollars to a retirement account so that you have tax-free withdrawals in retirement.

If considering rolling over your traditional IRA to a Roth IRA, you may want to take advantage of the current income tax rates. Once they increase, a Roth conversion could be much more expensive. Additionally, financial products such as fixed annuities allow for you to turn your lump savings into a monthly income stream in retirement, similar to a pension. These can be advantageous as they can allow you to structure your investments into an income source that you cannot outlive.

Ultimately, if you’re a recipient of the Utah Retirement Fund, it may be a good idea to have a supplemental income plan in the works. Pension plans across the country have seen changes that include reduced benefits or increased age of eligibility. If Utah had to follow suit, you will be glad that you planned ahead and saved.

Any comments regarding safe and secure investments, and guaranteed income streams refer only to fixed insurance products. They do not refer, in any way to securities or investment advisory products. Insurance on annuity product guarantees are subject to the claims-paying ability of the issuing company, and are not offered by Global Financial Private Capital.

Sean P. Lee is the president and founder of SPL Financial, Inc. and has spent the past decade educating and coaching area residents through their transition into retirement.