Use

Total Package Funding Schemes are, at present, the least common type of Flexible Benefits scheme. Your organisation would implement a Total Package Funding Scheme when it wishes to give total control of the employment package to its employees, allowing complete flexibility for them to model their Flexible Benefits package to suit individual lifestyle and risk tolerance preferences. The only exception would be in the case of legal or organisational requirements, such as a minimum holiday entitlement rule or personal pension contribution legislation.

The Total Package Scheme is currently still under development and is not delivered as a functionality in the first release of GB FlexBens (Release: 4.70 Extension 2.0 and ERP 1.0 2004)

Prerequisites

To administer a Total Package Funding Scheme, an organisation must have already defined and configured the range of benefit plans it wishes to offer its employees. Initially, the Benefits Administration framework is created in Customizing, under Benefits Administration -> Basic Settings . Subsequently, the specific benefits plans and levels to be provided must be maintained for each required benefit plan in the customising steps under Benefits Administration -> Plans .

Features

The key feature of the Total Package Funding Scheme is that total flexibility is offered to employees to select a total employment package that suits individual circumstances and risk tolerance levels.

You offer your employees a sum of money that represents the total value of their annual employment package. From this, the cost of compulsory benefits, such as minimum holiday quota, are deducted. The remaining value of the package can be modeled however an employee chooses. Therefore, your employees could take the remainder of their total package value purely as salary (after the costs of compulsory benefits have been deducted), or opt for a more extensive range of Flexible Benefits on offer from your organisation. The choice of benefit plans, and the level of each plan, is entirely at the discretion of your employee. No limits are placed on any benefit plan combination, apart from any applicable legal or organisational requirements.

For GB Flexible Benefits, the following list represents an example of the benefit plans you could offer. Depending on the particular plans your organisation offers, employees can model their employment package in the enrolment period choosing from the following benefit plans, for example:

Private Medical Insurance

Dental Care

Health Screening

Life Insurance

Personal Accident Insurance

Critical Illness Insurance

Travel Insurance

Holiday Buying/Selling

Company Car

Personal Pension

Child Care Vouchers

Personal Computer

It is unlikely that your organisation would extend this level of benefit choice flexibility to all employees, particularly in certain industry sectors. However, Total Package Funding Schemes are increasingly being considered as a means to give your employees maximum freedom of choice over their employment packages, particularly for managerial and executive levels.

When you implement a Total Package Funding benefits scheme, you must calculate the value of a Notional Salary for each participating employee. This notional salary forms the basis for any calculations such as daily rates for holiday, pension calculations and any other benefits that use “salary” as the basis for the cost calculation. As the total package value is an inflated salary figure, it is unrealistic to use this as the basis for calculations.

To allow for the process of benefits enrolment – where the total package value is reduced by the cost of the benefits chosen - many organisations take a nominal percentage of the total package value as the notional salary.

For example, an employee receives an annual employment package valued at GBP 60,000. The notional salary which will be used as the basis of all salary-based calculations is taken as 75% of the total package value. Therefore, the notional salary in this case is GBP 45,000.