The proposals were welcomed by the National Association of Pension Funds, which said they were in line with its own recommendations of a safety net to be used as a last resort.
Ron Amy, chairman of the association, said Professor Goode had achieved the right balance and had accepted the industry's strong view that the cost of problems such as inadequate management and disastrous investments by a pension fund should not be covered.
He said: 'The scheme will only kick in if a fund can't pay and there is nobody there to fill the gap. I think that is the way to do it.'
But with a new framework for regulation, minimum solvency standards and encouragement to auditors and actuaries to act as whistleblowers, Mr Amy thought there would be very few calls on the compensation scheme.
''The main thing is that it would take away the worry,' he said. If a scheme had been available to the Maxwell pensioners, they would have had the comfort of knowing that if the day came when their pension benefits actually stopped, the scheme would have picked up 90 per cent of the shortfall.
As well as recommending payment of all but the last 10 per cent of losses, the report says reimbursement by the pensions industry would be in the form of a general levy after the event.
This is similar to the depositor protection scheme for building societies, but a key difference is that there would be no limit on the amount of compensation. The levy, which the report says should come into immediate effect, would be based on the size of the liabilities of the pension funds required to contribute, and it would be administered by an independent Pension Compensation Board, which would have the sole right to decide on a payout.
All funded occupation schemes should be embraced by the scheme, while insured schemes may be brought in through a streamlined procedure, the report says.
Mr Amy said there was 'virtually universal' support for a scheme in the industry, and the big debate had been over its scope.
The report says the new compensation board should have the power to make interim payments where there is strong evidence of fraud, theft or misappropriation of assets, before a final decision. It should have power to withhold payments if it is not satisfied that trustees are taking reasonable steps to recoup losses.Reuse content