Is increased Pay in Lieu of Benefits a good idea?

It depends on your individual circumstances.

For example, an individual cannot purchase medical insurance for the same price as an employer and insurance paid for by an employer is tax-free while the insurance deduction for an individual is difficult to take. But if you are married and your spouse's employer provides family coverage, you may not need insurance. Or if you have another job, you may already have insurance.

The same idea applies to other benefits. Some benefits you may be able to get cheaper on your own, others not. Some benefits you might need, some you would rather get the cash for.