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Lump Sum Policy: Make the Most of Relocating Employees 

Woman's headshot with blurred background By Denise Oemig June 3, 2021

Categories: Location Services

Chances are, you’ve run into a lump sum policy before. Perhaps through a loan or lottery. Many companies have similar policies in some area of their business. One of the most common uses of this is in relocating employees. So what is a lump sum policy? And why might it work for your company? 

The Differences in Lump Sums 

There are two types of Lump Sum Policies. The first is the Fixed Lump Sum Policy. This policy, intended to help cover home finding, temporary living and final move expenses, is often provided to transferees based on distance. It does not take into account important factors, such as geography or family size.  

 The dynamically calculated lump sum is specific to the moving employee and the area they are moving to. Parameters can be changed based on whether the transferee is single or has a family, whether they’re renting or buying a home, etc. This lump sum policy ensures the employee will have the appropriate funds for the home finding, temporary living and final move expenses of their transition. 

Why administer a Fixed Lump Sum? 

Fixed Lump Sum Policies are easy. The calculation can be as simple as the distance from Point A to Point B. For companies with employees moving more frequently, this policy may seem like the best choice. And if the calculation is the same for everyone, then it’s equal, right? 

How the Dynamically Calculated Lump Sum Policy Helps You Cost Control 

What happens when an employee’s relocation stipend doesn’t cover the costs of their relocation? They file an exception request. This, along with payment paperwork and receipts will paint a clear picture of how poorly a Fixed Lump Sum Policy works. 

What happens when an employee’s relocation stipend covers above the cost of their relocation? Chances are, the company doesn’t hear about it. While at the outset it may appear to save time and money, the Fixed Lump Sum policy ends up a higher expense with a greater workload attached. 

Companies that employ a Dynamic Lump Sum policy will have a clear idea of the funds employees need when moving from Point A to Point B. These companies will also cost control by not overspending on Lump Sums and time savings with fewer exemptions reports. 

Making the Right Choice 

Without expertise in the field of living cost intelligence, it’s hard to know the right choice. Many companies continue to use Fixed Lump Sum Policies because they’re unaware of other options. Fortunately, we have a whole lot more than expertise. With an extensive living cost platform and over 9,000 cost data inputs, our reports offer data that is second to none. Learn more about how we can help your company relocate its employees fairly. 

Learn More Here

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