Leading Article: A long report that is short on answers

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CYNICS will ask whether Professor Roy Goode, chairman of the committee whose report on pensions was published yesterday, was paid by the page. A few specialists will stump up pounds 50 for its 1,000 pages; more will call the 0345 number on which the Department of Social Security has thoughtfully provided a free recorded summary.

But the Oxford law don and his colleagues had a wide remit: they were asked to look over the entire system of regulating occupational pensions in this country, and to see how a repeat of the Maxwell fiasco may be avoided in future.

Two of the report's points stand out. First, regulation is too diffuse: there is nowhere in Whitehall for the buck to stop. Second, the various professionals involved in pensions - lawyers, company directors, actuaries, accountants - can too easily disclaim responsibility when things go wrong. The report therefore suggests the Government should set up a single regulator for pensions, and require professional specialists to speak out when they have grounds for concern. Few will disagree.

Should company pension schemes collapse in future, the Goode panel opts for a formal compensation scheme to rescue the beneficiaries, rather than the impromptu arrangements that were put in place after the Maxwell debacle. But the scheme is to be 'post-event' - funded, that is, by a levy on other pension schemes after a crash takes place. Would you be happy to see compensation paid to the victims of a pension collapse out of your own surplus? Professor Goode and his colleagues are right to prescribe minimum solvency standards for pension funds, with regulators being given the power to swoop in and save badly or dishonestly managed funds from going bust. But there are questions about the solvency criteria themselves: with actuarial science inevitably inexact, dubious pension fund managers will still be able to make their finances look safer by the simple device of changing their assumptions about the future course of interest rates or investment returns.

The professor also fudged the issue of whether pension-fund surpluses belong to a company or to its employees. A stronger line might have been taken against company directors who plunder their fund's surpluses in good times, while refusing to put money back in bad.

Despite the evidence that Robert Maxwell abused his authority to get round the others involved in running his companies' funds, the report shrinks from insisting that pension fund chairmen must be properly independent. Nor does it provide for assets to be placed with an independent custodian, safe from confusion with the rest of the corporate resources.

Since the Government intends to give itself three years in which to put the Goode proposals into effect, it has plenty of time to remedy these deficiencies. Doing so will irritate many in the industry, but will save taxpayers' money in the long run.

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