UCC may face €8m pension deficit

Spending watchdog criticises university’s financial statement.

University College Cork could be facing an €8.3m funding crisis in one of its pension funds as a result of a dispute with the Department of Education.

The university has also been criticised by the public spending watchdog, which claims that UCC’s treatment of the €8.3m figure in its 2012 financial statement is not in accordance with accounting standards.

Following a recent audit, the Comptroller & Auditor General, Seamus McCarthy, issued a qualified opinion over UCC’s latest accounts due to a disagreement with the Department of Education over responsibility for future pension funding.

The dispute relates to the treatment of who pays future liabilities of one of two pension schemes operated by UCC.

The assets of one of UCC’s two pension schemes, which has been closed to new entrants since December 2004, was transferred to the National Pensions Reserve Fund in March 2010.

Under legislation any deficiency between superannuated contributions and benefits payable are made good by payments to UCC from funds provided by the Oireachtas.

The C&AG said UCC included the €8.3m figure as part of the €915m value of its deferred pension fund on the basis that UCC’s governing body considered all liabilities of the closed scheme rested with the State and not with the university.

UCC believes €8.3m represents funds receivable from the State for the professional added years liability in relation to transferred-in service, where UCC recruited a staff member from elsewhere in the public sector.

“Correspondence between the university and the Department of Education and Skills calls into doubt whether the State will meet that liability,” said Mr McCarthy.

The C&AG said UCC’s treatment of the €8.3m figure in its 2012 accounts was not, in his opinion, in accordance with financial accounting standards because the figure was “contingent in nature”.

Mr McCarthy said the value of the university’s deferred pension funding asset should be reduced by 8.3m to reflect the situation.

However, UCC claims it has receive legal advice that all liabilities of the pension fund following its transfer to the National Pensions Reserve Fund no longer rest with the university.

The Department of Education declined to comment on the dispute claiming the issue was still under discussion.

UCC did not respond to requests for comment.

Overall, UCC reported an operating surplus of €900,000 in the year ending September 2012.

The university said income had declined by just under 1%, or €2.7m, to €300.4m.

UCC attributed the decrease primarily to continued reductions in state funding for all teaching, learning and research activities which fell from €65.9m in the previous year to €58.7m.

However, it claimed such loss of income was offset by growing income from academic fees and research.

UCC honorary treasurer Dermot O’Mahoney said the university’s long-term financial sustainability was being adversely impacted by inadequate state funding for UCC’s dentistry programmes and essential maintenance.