Goode Report: Act to build structured framework: Main Recommendations (CORRECTED)

CORRECTION (PUBLISHED 2 OCTOBER 1993) APPENDED TO THIS ARTICLE

THE main recommendations of the Goode Report call for:

An Occupational Pension Schemes Act to lay out a properly structured framework;

A powerful pensions regulator to replace the Occupational Pensions Board. The new body would have the power and resources to carry out spot checks and investigations, to wind up badly run or insolvent schemes, and to reprimand, fine or remove trustees. Its costs should be met by the state;

A compensation scheme to protect members against fraud, theft and other misappropriation. The costs of compensation would be funded by a post-event levy on all pension schemes. Compensation would be limited to the lesser of 90 per cent of the value of the misappropriated assets or 90 per cent of the scheme deficit;

A minimum solvency requirement to ensure that schemes can cover their liabilities as they fall due. Schemes will be given five years to reach this target. Trustees and actuaries should have a duty to report shortfalls to the regulator;

A requirement that employers must seek the approval of the pensions regulator before using any pension surplus to make payments to themselves;

Employees should have the right to appoint trustees - at least one- third of the total for earnings-related schemes, at least two-thirds for money purchase schemes. Employers will not be able to remove member- appointed trustees;

A ban on employers taking contribution holidays if this would reduce scheme funding below the minimum solvency level;

Clarification of the role of professional advisers. Actuaries and accountants should have a duty to report serious or persistent irregularities to the regulator, without fear of subsequent legal action;

Members to be given better and clearer information, including an annual statement in plain English showing individual benefits, solvency margin, distribution of investments and fund movements.

A strengthened pensions ombudsman to settle pension disputes;

Certain breaches of statutory duty should be treated as criminal offences;

The banning of self-investment, though it calls for prohibiting loans from the pension scheme to the employer;

Banning of stock-lending, a move that is 'consistent with prudent investment';

Compulsory use of independent custodians to look after assets;

Schemes to have independent trustees.

CORRECTION

An article yesterday on the Goode Committee's recommendations for pension law reform erroneously contained four measures NOT proposed by the report. The committee did not call for the banning of self-investment by pension funds, the use of independent custodians to look after scheme assets, the appointment of independent trustees or the banning of stock-lending.