Term · Explained
Pension and retirement contributions
Savings schemes for retirement to which employees and employers contribute - such as pension funds, provident funds, 401(k) plans, or national social security.
Read more All hr glossary
Pay & benefits
Total compensation (CTC)
The total yearly amount an employer spends on an employee. Called CTC in some countries and total compensation or total cost of employment in others.
- Topic
- Pay & benefits
- Read time
- 2 minutes
- Level
- Beginner
- Applies to
- HR teams and employees
What it means
Total compensation (often called CTC, cost to company) includes fixed salary, employer contributions such as pension and insurance, variable pay, and benefits. It is not the same as take-home pay.
Benefits
- Helps employees understand their pay and benefits.
- Reduces payroll questions to HR.
- Builds trust through clarity.
- Helps compare offers correctly.
Example
- Total compensation of 60,000: base salary, employer pension contribution, insurance, and a performance bonus add up to this figure.
- Take-home is lower because income tax, employee social or pension contributions, and other deductions are withheld.
Related terms
- Gross salary
- Net (take-home) salary
- Variable pay
- Employer contributions
Rates, limits, and rules (for example for pensions, social insurance, and end-of-service pay) differ by country and company and change over time. Treat these as general explanations and confirm the current position where you operate before relying on them.
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