Thanks for taking the time to report this bug and helping to make Ubuntu 
better.  This is not a bug, but rather expected behavior:
https://wiki.ubuntu.com/SecurityTeam/Policies#Permissive_Home_Directory_Access

Please feel free to report any other bugs you may find.

** Information type changed from Private Security to Public

** Changed in: shadow (Ubuntu)
       Status: New => Invalid

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https://bugs.launchpad.net/bugs/1127792

Title:
  home dirs created world-readable

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