Uncover the value of total compensation
Do you watch any of the “CSI” shows? These popular TV programs feature forensic specialists who analyze bits of evidence to solve crimes. The investigators are relentless in their search for clues. Although sometimes gruesome, the shows are always entertaining.
Unlike a CSI specialist, you won’t need a crimescope or portable forensic laser system to figure out the value of your compensation and benefits package at Temple.
To make it easy, the University is issuing annual Total Compensation Statements this month. The statements will provide personalized information to full-time Temple employees and faculty who were employed on Dec. 31, 2005.
Total compensation is made up of both your pay and benefits. It’s used by the University to measure competitiveness against other employers to ensure that the overall package can attract and retain employees whose individual performance and team efforts help support the University’s success.
Pay is easy to understand — it’s your salary. You see it in every paycheck. To understand the total value of benefits, you have to be a bit of an investigator and dig a little deeper. The value of benefits usually is considered to be cost paid by you and the University. It includes benefits provided by the University and taxes that the University pays on your behalf, such as Social Security and Medicare.
On average, benefits add another 30 percent to 40 percent to pay. For a person whose annual pay is $40,000, the value of benefits is between $12,000 and $16,000. For that person, the total of pay and benefits — or total compensation — is up to $56,000.
Let’s take a look at the cost of several of the University’s benefits:
• Medical and dental insurance is pegged at the premium for you and your family members. Premiums reflect the level of benefits — the lower the deductible and copay, the higher the premiums.
• Life insurance and long-term disability insurance costs are the premiums the University and you pay for coverage.
• The value of pension benefits includes the University’s contribution to your retirement plan, in addition to the contributions you may be making.
• Tuition remission is the tuition you don’t have to pay.
Be sure to include the cost of benefits that are required by state and federal governments, such as Social Security and Medicare wage taxes. Not only do you contribute to the cost, but the University matches your contributions. Temple pays for unemployment and worker’s compensation, too.
Cost isn’t the only measure
Don’t be fooled into thinking that the price of benefits is the only way to measure value. Remember how much gets paid if you suffer a loss or a disability. That value doesn’t appear on your Total Compensation Statement.
If you or a family member were to suffer from a catastrophic illness or injury, Temple’s medical insurance plan could provide millions of dollars in benefit payments for covered expenses.
If you as an employee became totally disabled for the rest of your life, the long-term disability plan would continue 60 percent of pay, up to the maximum benefit. For a 30-year-old person who earned $35,000 a year and became disabled for 25 years, that would work out to $21,000 for each year of disability. That means that person could receive $525,000 in disability income.
Look below the surface
• Access. Talk to a person who is self-employed or unemployed, and he or she will probably tell you that simple access to reasonably priced insurance coverage is priceless. A slight health problem can push the cost up and the coverage level down, if it’s available at all. Dental coverage is generally not available outside of a work setting, and long-term disability insurance can be bought on an individual basis only when you have steady employment.
• Convenience. The University’s benefit program saves you the time and hassle involved in finding, comparing and purchasing insurance out in the marketplace. What could be easier than completing an enrollment form?
• Saving taxes. With programs such as the healthcare and dependent-care accounts, you don’t pay federal income tax on your contributions, and reimbursements are tax-free. Through WageWorks, you can pay for part, or all, of your commuter costs tax-free. By avoiding taxes on these expenses, you save money — from 25 percent to 36 percent, depending on your income.
• Deferring taxes. Income taxes are deferred on contributions to the Defined Contribution Retirement Plan and to a TSA, and your investments grow tax-free until you withdraw them.
With all these programs, it’s easy to understand why you might feel as if you need to be a CSI investigator to uncover the value of benefits. A close look at your personalized Total Compensation Statement will make all the pieces fit together in no time.
Frequently asked questions
|Who receives Total Compensation Statements?
Personalized statements will be sent in March to the home addresses of full-time faculty and administrators who were active employees on Dec. 31, 2005.
What date is the information based on?
The statements are a picture of the value of total compensation on Dec. 31, 2005.
Where did the cost information come from?
Costs are based on internal information from the University, such as pay and benefit costs, along with information from outside record-keepers, such as TIAA-CREF and Fidelity.