Total Package Funding Scheme Scenarios
Two common Total Package Funding Scheme scenarios are expanded below, highlighting the main features of this particular Flexible Benefits funding mechanism:
- Employee chooses minimal benefits
- Employee chooses an extended range of benefits
Scenario 1: Employee chooses minimal benefits
A single, male employee on monthly payroll is offered a total annual package valued at GBP 50,000.00, and is assigned a notional salary calculated as GBP 37,500.00. Your organisation requires that he take a minimum of 20 days holiday per year. The value of this holiday entitlement (GBP 2,884.62) is deducted from the total package value before he selects further Flexible Benefits during enrolment. The value of the package remaining before enrolment is therefore GBP 47,115.38.
The following benefit plans are offered by your organisation to this employee during the benefits enrolment period:
Private Medical Insurance
Dental Insurance
Health Screening
Life Insurance
Critical Illness Insurance
Travel Insurance
AnnualHolidayBuy/Sell
Company Car
Personal Pension
Child Care Vouchers
Personal Computer
The employee chooses only two benefits: a small executive car at a cost of GBP 3,240.00 and Private Medical Insurance for himself costing GBP 200.00. His final employment package would therefore be:
Total Package Value |
50,000.00 |
Less 20 daysHoliday |
2,884.62 |
Less Cost of Benefits Selected |
3,440.00 |
Salary Value |
43,675.00 |
The employee’s payslip would therefore show a basic annual salary of 1/12 th of GBP 43,675.00, and his basic pay record will contain a notional salary of GBP 37,500.00.
Scenario 2: Employee chooses an extended range of benefits
A married, female employee on monthly payroll is offered a total annual package valued at GBP 50,000.00, and is assigned a notional salary calculated as GBP 37,500.00. Your organisation requires that she take a minimum of 20 days holiday per year. The value of this holiday entitlement (GBP 2,884.62) is deducted from the package value before she selects further benefits during enrolment. The value of the package remaining before enrolment is therefore GBP 47,115.38.
During the benefits enrolment period, the employee chooses a wide range of benefits, from the same options as outlined in Scenario 1. Her choices are shown below, together with the annual cost (GBP) of these benefit options:
Private Medical Insurance |
Employee and Family |
545.00 |
Dental Insurance |
Employee and Partner |
118.80 |
Life Insurance |
GBP 250,000 Cover |
125.00 |
Partner Life insurance |
GBP 150,000 Cover |
75.00 |
Critical Illness Insurance |
GBP 100,000 Cover |
282.20 |
AnnualHoliday |
Buys 10 days above minimum |
1,442.30 |
Company Car |
Executive |
8,000.00 |
Personal Pension |
15% Employee Contribution |
5,625.00 |
Total Cost of Selected Benefits |
16,213.30 |
After benefits enrolment, therefore, the employee’s overall employment package would be as follows:
Total Package Value |
50,000.00 |
Less 20 daysHoliday |
2884.62 |
Less Cost of Benefits Selected |
16,213.30 |
Salary Value |
30,902.08 |
The employee’s payslip would therefore show a basic annual salary of 1/12 th of GBP 30,902.08 and her basic pay record will contain a notional salary of GBP 37,500.00.