New rules adopted Wednesday by the Securities and Exchange Commission for asset-backed securities and credit-rating agencies should make bond ratings more reliable and pensions more secure.

The asset-backed securities (ABS) guidelines could help make pensions more secure because the increased disclosures being mandated will aid institutional investors to better evaluate the quality of the loans in the debt packages.

The lack of information helped lead pension fund administrators to invest in overly risky mortgage, auto loan and other ABSs which ended up plummeting in value during the financial crisis.

Asset-backed securities are primarily acquired by pensions and other institutional investors.

An SEC official said the new regulations for credit-rating agencies should improve the reliability of the bond ratings for investors who rely on them.

For years, the ratings were seen as an unquestioned “Good Housekeeping seal of approval” by regulators and investors.

Bur practices by Standard & Poors, Moody’s and other “nationally recognized statistical organizations” showed during the financial crisis, this created a false sense of security.

To beef up the standards and credibility of the ratings, employees at large rating firms who rate bonds will no longer be allowed to participate in the marketing of their services to issuers.

To protect against overly optimistic forecasts for new exotic investments, including alternative money market funds, the agencies will have to do some work ahead of time to find out if they can reasonably expect to evaluate the investments properly.

While SEC Chairman Mary Jo White said the new rules should make a “real difference” for investors, consumer group Public Citizen’s financial policy advocate Bart Naylor said the new ABS guidelines are weak.

“Mom and pop should steer well clear of ABS. These rules won't solve opacity and inherently unknowable factors in the securities, Naylor said.

He added the credit-rating rule doesn't seem to make the necessary requirement of leaving selection to independent party, such as SEC.

The process of having the issuers pay the agencies that rate their bonds has long been criticized as ripe for bringing about too favorable ratings. Opponents said this would be like having a pitcher pay for the umpire.

The rulemakings were mandated by the four-year-old Dodd Frank Act.