Additional Funding Scheme Scenarios
There are generally two scenarios possible when employees enrol in
Flexible Benefits for Great Britain
(GB FlexBens) within an Additional Funding Scheme:
- Creation of a flex fund surplus (employee under-spends)
- Creation of a flex fund deficit (employee over-spends)
The following two scenarios illustrate both possibilities:
Scenario 1: Creation of a flex fund surplus
In this scenario, a male employee does not spend the total value of his flex fund, and under-spends .
He receives a basic salary of GBP20,000 per year. He is also allocated a further flex fund of 10% of basic salary (GBP 2,000) to spend on Flexible Benefits. This is in addition to his core benefits, automatically assigned to him during the pre-enrolment period.
The employee chooses the following additional Flexible Benefits, paid from his allocated flex fund, during annual Flexible Benefits enrolment:
<Employee Benefits Selections and Cost per Year (GBP)>
Annual Holiday : Buy 5 days
384.60
Private Medical Insurance: Employee + Family
545.00
Dental Insurance: EE + Family
118.20
Value of Flex Fund
2,000.00
Total Cost of Selected Benefits
1,047.80
Surplus
952.20
The surplus remaining after annual enrolment has taken place, in this case GBP952.20, will be paid to the employee in the form of a salary adjustment, unless the rules of your Flexible Benefits scheme stipulate otherwise.
Scenario 2: Creation of a flex fund deficit
In this scenario, a female employee selects Flexible Benefits with a value greater than the value of her flex fund, and over-spends . ( This assumes that employee overspending is permitted under your scheme rules).
She also has a flex fund of GBP 2,000.00, and the total cost of her selected benefits is GBP 2,083.85.
<Employee Benefits Selections and Cost per Year (GBP)>
Annual Holiday : Buy 7 days
500.30
Private Medical Insurance: Employee Only
355.00
Dental Insurance: EE + Family
118.20
Travel Insurance: EE + Family
110.35
Personal Computer: Mid Specification
1,000.00
Value of Flex Fund
2,000.00
Total Cost of Selected Benefits
2,083.85.
Deficit
83.85
The deficit remaining after annual enrolment has taken place, GBP83.85, is permitted under your scheme rules which allow a deficit of up to 10% (GBP200 in this case) of the value of the flex fund. Therefore, this deficit will be deducted from the employee in the form of a salary adjustment.
If no overspending is permitted, an error message will be presented to employees, informing them that they must choose benefits to a value no greater than the value of their allocated flex fund.