Use

No Additional Funding Schemes are the simplest type of Flexible Benefits schemes to administer, within Flexible Benefits for Great Britain (GB FlexBens). You implement a No Additional Funding Scheme when you wish to give your employees a degree of flexibility in their choice of benefits. You provide a basic salary to your employees plus a range of core benefits and/or standard benefits.

It is important to distinguish between core and standard benefits, as No Additional Funding Schemes can involve the provision of both these types of benefits. Core benefits are automatically provided by an organisation and are fixed, while the levels of standard benefits offered by default can be modified by employees during the benefits enrolment process.

Core and standard benefits often include varying combinations of a personal pension, annual holiday entitlement, private medical insurance (PMI), and life insurance. In some instances a company car is also provided as a standard benefit, although this is often dependant on an employee’s position or grade.

No Additional Funding Schemes therefore consist initially of employer-funded benefits packages that you offer to your employees, comprising core and standard benefits. The level of coverage is preset by you and no additional funding is provided for your employees to select benefits options.

Prerequisites

To administer a No Additional Funding Scheme, you must have already defined and configured the core and/or standard benefits you wish to offer your employees. Initially, you create the GB FlexBens administration framework in Customising, under  Benefits Administration Basic Settings . Subsequently, the specific benefits plans and levels you offer must be maintained for each required benefit plan, in the Customising steps under  Benefits Administration Plans .

Features

The key feature of this particular funding scheme is that the standard benefits you offer as an organisation can be changed by your employees during benefits enrolment, to suit individual circumstances.

In the pre-enrolment period, you decide initially on a fixed range of standard benefits offers, each with a predetermined cost to your organisation. During enrolment, if an employee opts to increase the overall level of the standard benefits provided by default in the pre-enrolment period, he or she must absorb this additional employee cost. Conversely, should an employee opt to decrease the overall level of benefits from the standard levels provided, an employee credit is created. This saving can be later credited to the employee via payroll, for example.

Therefore, when administering a No Additional Funding Scheme, the cost to the organisation of the benefits package per employee is fixed in the pre-enrolment period when the standard benefits are determined.

Although any changes made to benefits levels made by employees during enrolment will not affect the standard value of the benefits to your organisation, the levels of your employer National Insurance (NI) contributions may be affected. An employee’s benefit choices during enrolment may produce additional employer NI costs or savings.

Within Flexible Benefits for Great Britain, the principle of NI Cost Neutrality can be applied by your organisation to ensure that employer NI contributions per employee are held at pre-enrolment levels. To apply NI Cost Neutrality to a No Additional Funding Scheme, NI neutrality attributes must be set in Customizing, under  Benefits Administration Basic Settings Define Flexible Benefits National Insurance Neutrality (FLEX) .