Two books landed on my desk in September - one on the subject of good pension governance, the other on retirement income.

Securing Lifelong Retirement Income is sub-titled ‘Global Annuity Markets and Policy’ (Mitchell, Piggott and Takayama, eds, OUP 2011) and studies annuity markets, addressing their creation and development in a range of countries including the US, the UK, Chile, Sweden and Canada, looking also at the challenges faced by India.

Noting a forecast 250% rise in the number of over-60s by 2050 (to 2bn from 750m in 2008), the contention is that well developed annuity markets will be necessary both to remove the burden of pension provision from the state in wealthy countries and to efficiently translate the savings of the nascent middle class in the developing countries into an adequate retirement income.

‘Good Governance for Pension Schemes’ (Thornton and Fleming, CUP, 2011), addresses the occupational pension sector - often widely acknowledged as the most efficient way to provide retirement income, either through traditional defined benefit, defined contribution or a hybrid. It aims to outline best practice in governance.

In much of the western world, old defined benefit promises are seen as increasingly unaffordable, especially in the public sector - look at the deficits of many US state pensions or the UK’s underfunding issue and the long retreat from defined benefit provision.

From an Anglo-Saxon perspective, the two policy outcomes of DB and DC seem irreconcilable but they need not be. There is much to learn from around world, especially continental Europe, when designing policies to develop second or third-pillar savings vehicles that produce the desirable outcome of long-term pension saving. A good example is the Netherlands, where a collective system is retained, but the traditional DB system is taking on DC (or ‘defined ambition’) characteristics.

And pension governance is certainly far from being a legacy issue: providing pension saving through a collective, trust-based vehicle is a model that need not be consigned to history as old style DB winds down.

When weighing the issues of retirement income and pension governance, the obvious conclusion is that the latter can greatly aid the production of the former. Occupational pension systems are providing retirement income on the most part efficiently and well. The trick will be to marry the best of trusteeship, investment structure and risk management with the flexibility and individuality of DC accounts.

Undoubtedly retirement systems of the future will have need of both good pension governance and well developed annuity markets to facilitate the conversion of capital into lifelong income.