The Department of Education and the Department of Finance have intervened in the dispute about an extended five-year term for the president of UCC.
Prof Gerry Wrixon, who is 62, will today formally accept the offer from the college's governors of an extended term.
But in a letter to the UCC president, the Higher Education Authority, which manages the third-level sector, has asked for clarification of his plans.
In his letter, the HEA chief executive, Mr John Hayden, says both departments have contacted him seeking clarification about the possible pension implications of an additional term for Prof Wrixon.
The HEA says that its understanding is that college presidents shall retain office for a period of 10 years or until they reach 65. Sources say both departments are concerned that an extension for Prof Wrixon could set a precedent and open the way for additional pension payments if allowed across the public service.
However, in a letter to the college governors, Prof Wrixon says he wants all pension arrangements frozen from the time he reaches 65 in May 2005. He says he is accepting the extension out of a sense of duty to the college and not for any financial gain.
Prof Wrixon is admired for his pragmatic, "can do" approach that has helped to make UCC one of the leading research colleges in the State. But his detractors accuse him of a remote, autocratic style, a charge vehemently denied by Prof Wrixon.
The HEA letter makes it more likely that the issue will be resolved in the courts. Some senior academic figures in UCC may challenge the issue, arguing that the extension breaches the spirit of university legislation and the statutes governing the college. They allow the president to hold office only until the age of 65.
But legal advisers to Prof Wrixon insist the college statutes allow him to continue in office beyond normal retirement age. One source claimed: "There is no legal problem. There is no legal issue."
Both Prof Wrixon and the college press office declined to comment on the issue yesterday.
The whole affair is unwelcome publicity for UCC, which has more than 10,000 students.
In recent years, the college has managed to outstrip both UCD and Trinity in its share of research funding. It has also received strong financial backing from the US-based group Atlantic Philanthropies, run by Irish American billionaire Mr Chuck Feeney.