---
title: Communicate Deferred Compensation with Total Rewards Statements
description: For employees, deferred compensation may be a tough pill. What is the best way for employers to inform their employees of deferred compensation?
image: https://www.backstitch.io/hubfs/Blog/Images/reading-statistics-4PN2DWT.jpg
---

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<https://www.backstitch.io/blog/author/dan-jacobson> by [Dan Jacobson](https://www.backstitch.io/blog/author/dan-jacobson)  on Feb 16, 2021 [Human Resources](https://www.backstitch.io/blog/topic/human-resources) [Total Rewards Statements](https://www.backstitch.io/blog/topic/total-rewards-statements)

# Communicate Deferred Compensation with Total Rewards Statements

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Employees need a straightforward way of viewing the details of their money coming in — and of their money that gets held back. Some might understand salary as a number, but the reality is that the salary only makes up a smaller fraction of what an [employee receives](https://www.careercast.com/career-news/why-benefits-are-more-important-salary) from their employer. A Total Rewards Statement provides a comprehensive way for an employee to understand their compensation package and basic salary information. 

> [Learn More: How to Modernize Your Total Compensation Statements](https://www.backstitch.io/total-comp-statements)

Usually, employers provide Total Rewards Statements to employees annually in a physical or digital format. Total Rewards Statements are an addition to, but not a substitute for, pay slips or annual salary statements. Among the purposes of a Total Rewards Statement is to calculate, assemble, and assess the total value of an employee’s package in addition to basic salary. 

## Why Employers Use Total Rewards Statements

These days, employees get much more than a basic salary from their employer. A Total Rewards Statement allows them to see multiple factors that come into play regarding their compensation, such as benefits and perks. Usually, employers use the Total Rewards Statement to highlight the value of an employee’s benefits package. Beyond providing a visual representation of an employee’s salary, it also details the total number of overtime hours worked, bonuses or incentives received at any point during the year, and commission for sales. 

Depending on your [employer and their perks](https://www.forbes.com/sites/mikekappel/2020/04/16/what-an-employee-wants-6-benefits-youve-got-to-be-offering/?sh=5227a0c15800), the Total Rewards Statement might also provide a review of special benefits like comped meals, child care, education/tuition reimbursement, or even paid parking. Many benefits that might pop up throughout the year will be forgotten later, so Total Rewards Statement gives an annual recap of all the missed details.

## Communicating Deferred Compensation

Issues may arise if an employee does not understand what a specific sum of their salary went towards or why it is being set aside for the near or distant future. [Deferred compensation](https://www.wealthenhancement.com/blog/deferred-compensation-how-when) specifically includes any portion of income to be paid out at a later date. A Total Rewards Statement is an effective communication tool for employees to gain a better understanding of what they earn now, and what is coming later.

![Deferred Communications Now and Later](https://www.backstitch.io/hs-fs/hubfs/Blog/Images/Post%20%23122%20Deferred%20Comms%20.png?width=600&name=Post%20%23122%20Deferred%20Comms%20.png)

For example, a Total Rewards Statement will indicate the amount of employee compensation heading towards pensions, retirement plans, and stock options. With these details laid out in a Total Rewards Statement, employees can visualize exactly where their money is going every year clearly and concisely. They won’t be confused about their money disappearing if presented to them clearly so they can see how it will benefit their future.

Employers can more efficiently generate Total Rewards Statements with a tool that can calculate raw data and create total compensation reports. A digital solution can be updated with each pay period, while paper statements can only be available intermittently. It also offers a more interactive experience for employees to test out. Pair your statements with an employee communications platform to effectively reach everyone in your organization.

### [See backstitch's Digital Total Rewards Solution in Action](https://www.backstitch.io/total-reward-statement-examples)

### [Dan Jacobson](https://www.backstitch.io/blog/author/dan-jacobson)

Client Success Executive

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## [Essential Skills and Tools that Every Total Rewards Professional Need](https://www.backstitch.io/blog/skills-and-tools-for-trs-professionals)

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