From April 2022, the Teachers’ Pension Scheme monthly contributions reconciliation (MCR) replaced the monthly data collection (MDC), the monthly contributions breakdown, and enrolment data collection processes.
The MCR is an amalgamation of the three separate processes through a new data collection method and ultimately provides both the employee and pension provider greater insurance that all information gathered is accurate. This, in turn, helps to reduce the risk of discrepancies between service and pension contributions.
Benefits of the monthly contributions reconciliation (MCR)
The introduction of MCR brings many benefits to payroll teams and pension scheme members alike, including:
- Significant time savings by completing one form as opposed to three different documents
- A simpler and more efficient End of Year Certificate (EOYC) process
- Greater validation to ensure data is accurate, eliminating queries and the risk of costly pension arrears
- More reliable and accurate benefit statements for pension scheme members
To cater for this new data collection method, leading HR and payroll software providers, like Zellis, have built dedicated Teachers’ Pensions monthly contributions reconciliation modules into their payroll solutions.
Such modules provide users with all the functionality they need to create accurate MCR returns – including the creation and maintenance of all necessary data.
To help you get to grips with the introduction of MCR, here are three key changes that you need to know:
1. Role identifier
A new data item, the role identifier is an employer-generated reference number used to identify each employment and the individual job roles under that employment.
It allows Teachers’ Pensions to record concurrent service within the same school, without the need for employers to ‘roll up’ the service into one row of data.
2. Notional pensionable pay
Notional pensionable pay is the amount of pensionable pay the member would have received for the period of service the row of data relates to if they were not on reduced pay.
This data item should only be used if the Status Indicator is ‘FL’ (family leave) or ‘OS’ (occupational sick leave). The value will differ depending on the calculation method used to determine the contribution deduction/refund – more details on this below.
3. Contribution Calculations
There are two methods for calculating contributions: when paid and when earned.
When paid method
This is the most common method used to determine a member’s contribution tier and deductions.
This method requires you to take the total of the member’s pensionable pay paid within a pay period (excluding any payments relating to overtime and/or arrears from a backdated pay increase), multiply it by twelve and use this calculated value to determine the contribution tier the member is required to pay in that pay period.
When earned method
This is the method you’d use to calculate refunds, or when making a payment to a member in a pay month after the one in which the member left employment.
If completing a ‘When Earned’ calculation you must select the indicator ‘WE’ in the calculation method for the contribution tier field.
For more details on MCR, visit the Teachers’ Pensions monthly contributions reconciliation user guide. To find out how our dedicated functionality can help support you in the processing of MCR, get in touch today.
About the Author
Beth is a Senior Product Manager within the payroll and portal product team at Zellis. Having worked within the HR technology space for 5 years, Beth is passionate about all things HR and collaborates with various stakeholders to deliver software enhancements that meet the needs of our customers, including the Teachers’ Pensions monthly contributions reconciliation module in ResourceLink.