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One of the provision in the Code states that “Only basic salary should be pensionable.”
What are the potential consequences if pension benefits are instead based on the gross salary?This provision is designed to promote fairness, transparency and responsible corporate governance practices by requiring pension contribution rates for executives to be aligned to those of the workforce.
The Code goes on to say “The pension consequences
and associated costs of basic salary increases and any other changes
in pensionable remuneration, or contribution rates, particularly for
directors close to retirement, should be carefully considered when
compared with workforce arrangements.”
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