Two employees of a subsidiary of University of Limerick received additional pension benefits valued at €1.2m, after being admitted to a university pension scheme that was about to close to new entrants, according to a report by the Comptroller and Auditor General.

The report centres on the handling of remuneration, including pension and severance arrangements, for certain senior staff in the University of Limerick and Institute of Technology Sligo.

It found that under an arrangement put in place in late 2012, the two executives employed by the subsidiary were admitted to a defined benefit pension scheme that was about to close to new entrants.

The C&AG states that in general, subsidiary companies are used by third level institutions to manage non-core functions in a manner that separates their business affairs from those of the institution.

He says that this allows the non-core functions to be run on commercial lines, with subsidiary employees remunerated on competitive market terms, with pension entitlements on a less generous defined contribution basis.

The university justified admitting the executives to the defined benefit scheme by saying they had been promised pension benefits equivalent to employees recruited to the university.

However, according to the C&AG, there was no documentation to support this.

The additional pension benefits from being admitted to the Exchequer-funded defined benefit scheme have been valued actuarially at €1.2m.

The C&AG also examined the awarding of "professional added years" for pension purposes in UL.

He notes that certain public sector pension schemes provide in exceptional circumstances for the discretionary awarding of professional added years to compensate where certain professional or technical staff cannot qualify for a full pension based on 40 years service by their mandatory retirement age.

He says that professional added years are a form of remuneration for which sanction would normally be required.

Historically, the award of professional added years for pension purposes in five of the seven universities are approved on a case-by-case basis by the Department of Education and the Department of Public Expenditure and Reform.

However, up to last April, UL and Dublin City University operated their own separate framework for awarding additional years.

After examining the awards of professional added years in DCU and UL between 2012 and 2016, the C&AG found that UL awarded such benefits to its employees more generously than DCU.

While DCU restricted awards to academic staff only, 18% of UL's awards went to non-academic or managerial staff. 

The report says that since April, both DCU and UL will have to seek approval for awarding added years from the Pension Unit of the Department of Education and Skills.

UL's handling of two severance deals in 2012 is also criticised, with the report stating that at that time, the university misrepresented the circumstances around the severance deals to the C&AG and at a hearing of the Oireachtas Public Accounts Committee. 

In particular, the university failed to disclose that it had entered into three year consultancy contracts with both managers at the same time as the severance deals were agreed.

The report states: "Relative to what the two managers would have received had they continued in employment to the standard minimum retirement age, the combined severance/consultancy arrantement put in place resulted in additional costs to the University of Limerick (including recurrent pension payments) estimated at €310,000 in net present value terms".

Finally, the report notes that a 2016 severance arrangement at Institute of Technology Sligo "significantly exceeded" the sanction received from the Department of Education and Skills, when account is taken of a sum incorrectly classified as a payment related to sabbatical leave.

In a statement, the University of Limerick said it welcomes the C&AG report, and that it is committed to "making the changes needed to address the issues raised".