I read an article last week that talked about two “glaring reasons” (as he put it) for the pension crisis being experienced in parts of our country.

It was a disturbing, but eye-opening, article suggesting that you don’t put too much faith in your expected pension, especially if it’s coming from a state or local government. Poor investment performance and aggressive actuarial assumptions appear to be the downfall of these pensions. Maybe a little politics as well.

What can you as do your own pension officer? Don’t depend on aggressive assumptions of return to make your plan work. Also, if you secure guaranteed lifetime income, you’ll reduce your investment risk and eliminate your actuarial, i.e., longevity risk.

Don’t get me wrong. I think the New York insurance department is the best – and toughest – State insurance department. That’s why some companies only do business in 49 states and forget about New York.

In a new regulation just published by New York, the department makes it more difficult for annuity holders to convert their deferred annuities into current income. (You can learn more about it from this government-issued press release.)

The state refers to it as “replacement.” I call it “annuitization.”

If the current carrier doesn’t have the best immediate or deferred income annuity rates and the owner of a policy is looking for income, staying with the current deferred annuity and taking withdrawals has tax disadvantages versus doing a tax-free exchange to an income annuity.

While, of course, the annuitization must be suitable, where it is suitable, it should not be discouraged since it’s often in the consumer’s best interest.