# So what’s the difference between CTC monthly salary and pensionable salary

#### aqua02

##### Well-Known Member
As the title states, can anyone elaborate please?

##### Honorary Master
Pension able salary is usually something like 70 percent of ctc

#### Rkootknir

##### Expert Member
As the title states, can anyone elaborate please?
It's decided by your employer. As Sinbad says, usually a % of cost to company: numbers like 80%, 90%, 100% are common. Some employers allow you to choose your pensionable salary %.

You retirement fund contributions (both member and employer if relevant) will be based on your pensionable salary. So, let's say your pensionable salary is 90% of CTC and your CTC is R30k p.m. If your member and employer contributions are 7.5% and 10% of pensionable salary respectively, they will be calculated as follows:

Pensionable salary: R30k * 90% = R27k p.m.
Member contribution: 7.5% * R27k = R2 025 p.m.
Employer contribution: 10.0% * R27k = R2 700 p.m.

In particular, you should note that if you want to max out your retirement fund contributions to the 27.5% maximum that is available as a tax deduction, you should divide the 27.5% by the pensionable % of CTC, i.e. 27.5% / 90% = 30% for the above example. This assumes that your not hitting the R350k max retirement fund contributions per year cap though. Also, if you are making retirement annuity contributions the calculation of the maximum for an employer sponsored scheme will be lower than the e.g. 30% above.