ANNUAL REPORT

for the year ended

30 September 2007


CONTENTS

·  How the Scheme Operates 2

·  Investments Committee ; Professional Advisers 2/3

·  Summary of Report 4

·  Membership 5

·  Summary of Scheme Benefits 6/7

·  Information to Members 8

·  Current Developments 8

·  Actuarial Valuation 8/9

·  Financial Statements 10

·  Summary of Income & Expenditure 11

·  Summary & Capital Account 12

·  Investment Holdings – Sectorial Distribution 13

·  Investment Performance 14

·  Five Year Summary 15/17

The objective of this booklet is to provide members with an overview of the University College Cork Pension Scheme and its related Fund. Nothing in this booklet over-rides the provisions of the relevant pension statutes.

UNIVERSITY COLLEGE CORK PENSION SCHEME

All full-time, part-time and job-sharing permanent staff (excluding those for whom alternative pension arrangements have been made) of the University have an entitlement to benefits under the Scheme. Benefits may also apply to surviving spouses and children. Established by U.C.C. statutes, the staff members and retired staff members are referred to as “participants” in the Scheme. The terms of the Scheme generally follow those applicable in the public sector. Full details of the current benefits are contained in the Explanatory Booklet, which is available from the Department of Human Resources. The University also operates a separate Defined Contribution Scheme for certain full-time and part-time staff.

The Scheme is now contributory for practically all staff participants with employee contributions varying within the range 1½% to 6½%. (See Explanatory Booklet and page 7 of this Report for more details) The University makes an employer’s contribution varying from 10% to 15%.

To enable the University to meet its contractual obligations to pay pensions, a Pension Fund has been established. Its function is to provide adequate resources to fund pensions at the level payable at retirement. Post-retirement increases are funded by way of supplementary allocation from the annual income of the University.

The Scheme is operated under the aegis of the Pensions Committee, which is the Finance Committee, a sub-committee of the Governing Body. The Finance Committee appoints the Investments Committee, which oversees the management of the Pension Fund investments.

Investments Committee

Mr. D.O’Mahoney, Hon. Treasurer, Chairperson

Professor Michael Murphy, President

Mr. Tom Kavanagh

Mr. Brian McCarthy

Mr. Martin Kenneally

Mr. Diarmuid Collins, Bursar/Chief Financial Officer

Professional Advisers

Investment Managers

Baillie Gifford Overseas Ltd.,

Calton Square,

1 Greenside Row,

Edinburgh EH1 3AN,

Scotland.

2

A.I.B. Investment Managers,

Percy Place,

Dublin 4.

Hibernian Investment Managers Limited,

La Touche House,

I.F.S.C.,

Custom House Docks,

Dublin 1.

Investment Advisers

L.&P. Financial Trustees Limited,

2/3 Terminus Mills,

Clonskeagh Road,

Dublin 6.

Auditors

Deloitte & Touche,

City Chambers,

4 Lapps Quay,

Cork.

Actuary

Mercer Human Resource Consulting,

23/25 South Terrace,

Cork.

Solicitors

Ronan, Daly, Jermyn,

12 South Mall,

Cork.

Bankers

Bank of Ireland,

32 South Mall,

Cork.

The Pensions Board – Registration Number: 43791

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UNIVERSITY COLLEGE CORK PENSION SCHEME

Year to 30 September 2007

SUMMARY OF REPORT

·  The rate of return (income earned plus capital appreciation) for the year was positive at 7.3%. This compares with an average positive return of 12.26% over the five years to 30 September 2007 and 9.8% in the previous year.

·  The contributions to the Fund for the year amounted to €15m. (previous year €13.2m)

·  The value of the Fund’s assets increased from €272.5m at 1 October 2005, to €300.5m at 30 September 2007.

·  Pensions and lump sums paid amounted to €14.4m. Of this sum, €10m was financed directly from the Pension Fund, while the balance of €4.4m (representing post-retirement increases) was borne by the Income and Expenditure Account of the University.

·  The active membership at the year end was 1539 compared with 1432 (inclusive of members on career break/leave of absence) at the start of the year. The number of pensioners was 420 (379 in previous year). The number of former staff who are entitled to deferred pensions is 195 (182 in previous year).

·  During the year, in accordance with the Pension Scheme and with public sector policy, pensions in payment were increased so as to maintain relativity between the level of pension payable and the salary on which it was based.

·  The positive return means that the value of the Pension Fund at 30 September 2007 has increased to €300.5m from €272.5m in 2006.

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UNIVERSITY COLLEGE CORK PENSION SCHEME

Membership Reconciliation at 30 September 2007

Actives

Active at 30/9/05 1432

Less: Retirements -34

Deferred/Preserved -24

Other Leavers -3

Plus: New Entrants 168

Active at 30/9/07 1539

Deferreds/Preserveds 195

Pensioners 420

TOTAL MEMBERSHIP 2154

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UNIVERSITY COLLEGE CORK PENSION SCHEME

Summary of Scheme Benefits

1. Retirement Age: Normal retirement age is 65 years but members may, at their own option, retire from age 60 onwards, subject to three months notice (excluding long vacation). New entrants to the public sector with effect from 1 April 2004, do not have the option of retiring prior to age 65 other than on a cost neutral basis, and may continue in employment beyond that age.

2. Pension Benefit: (see paragraph 7 below)

Option 1: 1/80th of pensionable remuneration for each year of pensionable service subject to a maximum of 40/80ths (i.e. 50% salary)

plus

a lump sum of 3/80ths of final salary for each year of pensionable service subject to maximum of 120/80ths (i.e. 150% of salary)

Option 2: [Available only to members who joined before 6 April 1995] 1/60th of final salary for each year of pensionable service subject to a maximum of 40/60ths (i.e. two-thirds salary) (NO lump sum)

3. Spouses & Children’s Benefits: On death in service, a death gratuity of between 100% and 150% of final salary (depending on pensionable service) is payable; the spouse’s pension is the equivalent of 50% of the benefits based on the 1/80th calculation referred to in Option 1 above but reckoning the pensionable service as if staff member had been 65 years of age at death. On death after retirement, the spouse’s pension is 50% of the deceased member’s pension. Benefits are also payable in respect of eligible dependant children, generally on the basis of one-third of the spouse’s pension per child, up to a maximum of three children. A Social Welfare Contributory Spouse’s pension may also be payable.

4. On Leaving Service: On resigning before minimum retirement age (60 years), a member may transfer his/her benefits to another approved scheme or may avail of a deferred pension, payable (generally) from age 60. If a member has less than two years ‘qualifying service’, he/she may take a refund of his/her own contributions less tax.

5.  Pension Increases: It is the present practice (in accordance with public sector policy) to review pensions in payment so as to maintain relativity between the level of pension and the salary on which it was based.

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6. Additional Voluntary Contributions: A member may, under certain conditions: (1) purchase notional additional service, and/or (2) arrange for additional life assurance cover of twice annual salary in respect of death before retirement. Both of these arrangements are funded in full by the staff members’ additional contributions.

7. Members who joined 6 April 1995 onwards: In accordance with regulations introduced by the Minister for Finance covering all public service schemes, including those of the Universities, the Scheme is now an “integrated” one (also referred to as “co-ordinated”) in that it takes into account the Contributory Old Age Pension (or similar contributory benefits) payable under the Social Welfare provisions. For members who joined before 6 April 1995, there is provision for the abatement of pension payable from the Scheme if there is entitlement to certain Social Welfare benefits, in respect of which the University has made contribution. For members who became participants on or after 6 April 1995, the following amendments to the foregoing provisions apply:

(a) only Option 1 for Pension Benefit applies (see page 6)

(b) pensionable remuneration for pension calculation becomes final salary less twice the annual rate of Social Welfare Old Age Contributory Pension; for lump sum calculation, the final salary is not abated

(c) pensionable remuneration for spouse’s pension calculation is abated by the annual rate of social insurance old age contributory pension (i.e. not by double the rate as applies for personal pension calculation)

(d) a contributory Social Welfare pension will also be payable from age 65.

8. Contributions: For those who became members before 6 April, 1995, the only contribution payable is 1½% of salary under the terms relating to the spouses and children’s benefits.

For most of those who became members on or after 6 April 1995, the overall contribution is 6½%, comprising 3% of pensionable remuneration and 3½% of net pensionable remuneration (i.e. net of twice the annual rate of Social Welfare old age contributory pension). The rate of remuneration payable to members to whom the 6½% contribution applies is generally, but not always, higher than that payable to corresponding grades, subject to the low rate of contribution (1½%). The difference effectively takes account of the 5% additional contribution (i.e. the salary is 1/19th higher).

In the case of a small number of longer-serving staff, in respect of whom different or no benefits for spouses and children apply, no contribution is payable.

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For further details of the Pension Scheme, see Explanatory Booklet available from the Department of Human Resources.

INFORMATION TO MEMBERS

The following information is provided to members:

·  An Explanatory Booklet

·  Personal Benefit Certificate (annual)

·  An Annual Report providing a summary of the Scheme’s statistics

(this document)

·  Briefing Sessions

With effect from 1 January 2005, all new entrants to the University join the “Model Scheme”. The Model Scheme is the scheme as required under the terms of the Universities Act 1997. The scheme is very similar to the existing scheme with just a few minor changes.

A Cost Neutral Early Retirement facility is now available to all members. Members can now retire prior to age 60 on a “cost-neutral” basis. Additional information on the scheme can be accessed via the Pensions Office.

Finally, the scheme has in place Internal Dispute Resolution (I.D.R.) procedures in order to deal with certain types of complaints which may be made by actual or potential beneficiaries of the scheme. A copy of the procedures is available online via the Pensions Office homepage which can be accessed via the following link:- http://secretary.ucc.ie/pensions/index.asp

ACTUARIAL VALUATION

The most recent actuarial valuation of the Scheme took place on 1 October 2004. The next full valuation is due to take place on 1 October 2007. The latest statement from the Actuary is reproduced on page 9.

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1.

4.

2.

4.

3.

4.

4.

4.

9

MERCER

MARSH MERCER KROLL

:GUYCARPENTER OLIVERWYMAN

UNIVERSITY COLLEGE CORK PENSION FUND

Actuary's Statement

The latest actuarial valuation of the University College Cork Pension Fund was carried out at an effective date of 1 October 2004 by my colleague Paul Dillon. The assessment of the pension liabilities made no provision for pension increases paid after retirement, which are funded separately by the College. The results of that valuation indicated the following:

The assets of the fund, together with a future contribution rate of 26.3% of pensionable salaries, would meet the expected cost of the benefits, on the basis of the assumptions outlined in the valuation. The fund was sufficient to meet 79% of past service liabilities at the valuation date after allowing for future salary increase. These results assume that all active members will retire at age 65; additional costs will arise if members opt to retire at an earlier age.

The current level of contribution amounts to 18.2% of pensionable salaries. The need for increased funding is consistent with other pension schemes in the university sector and with pension schemes in general. The College acknowledged the actuary's recommendations and agreed to defer further consideration of the funding requirements pending the outcome of this review

The Higher Education Authority established a working group to review the funding arrangements for university pension schemes in general and to consider the options with regard to future obligations. In 2008 the Department of Finance contacted this working group and advised that a decision had been made that authorised the Department to enter into discussions with the trustees and administrators with the intention that the National Pension Reserve Fund would take over the assets and the State would take over the liabilities.

The fund has been granted a derogation from the minimum funding standard requirements, as set out in Part IV of the Pensions Act, 1990 in anticipation of the State taking over the assets and liabilities of the Fund.

15 August 2008

9

UNIVERSITY COLLEGE CORK PENSION FUND

FINANCIAL STATEMENTS

The Pension Fund accounts are maintained separately from the financial statements of the University and are audited by the University’s Auditors. The Auditor’s report follows, as do the financial statements on pages 11 and 12 for the year ended 30 September 2007.

10

UNIVERSITY COLLEGE CORK PENSION FUND

Summary of Income & Expenditure

Year to 30 September 2007

Income

2005/06 2006/07

€000 €000

5,755 Investment income 8,143

13,268 Contribution from University and Members 15,057

4,041 Supplementary contributions from University 4,413

for post-retirement pension increases

1,853 Transfer values received 4,423

24,917 32,036

Expenditure

12,565 Pensions and Lump Sums 14,446