This bug was fixed in the package unity8 -
8.00+14.10.20140729.1-0ubuntu1

---------------
unity8 (8.00+14.10.20140729.1-0ubuntu1) utopic; urgency=low

  [ Michael Terry ]
  * Check user's pin/password using PAM, instead of a plaintext keyfile.
    New build dependency: libpam0g-dev for phone unlock with PAM (LP:
    #1234983)
 -- Ubuntu daily release <[email protected]>   Tue, 29 Jul 2014 
23:36:30 +0000

** Changed in: unity8 (Ubuntu)
       Status: New => Fix Released

** Changed in: ubuntu-system-settings (Ubuntu)
       Status: Invalid => Fix Released

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https://bugs.launchpad.net/bugs/1234983

Title:
  greeter pin stored in plain text with hidden demo greeter code

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