{"id":7485,"date":"2014-03-05T17:55:10","date_gmt":"2014-03-05T17:55:10","guid":{"rendered":"http:\/\/daruliftabirmingham.co.uk\/?p=7485"},"modified":"2014-03-05T17:55:10","modified_gmt":"2014-03-05T17:55:10","slug":"provident-funds-2","status":"publish","type":"post","link":"https:\/\/daruliftabirmingham.co.uk\/home\/provident-funds-2\/","title":{"rendered":"Provident Funds"},"content":{"rendered":"<p style=\"font-size: 13px; text-align: right;\">\n\t<span style=\"color: rgb(0, 0, 0);\"><span style=\"font-size: 14px;\"><span style=\"font-family: verdana, geneva, sans-serif;\"><strong>Fatwa ID: 01582<\/strong><\/span><\/span><\/span>\n<\/p>\n<p style=\"font-size: 13px;\">\n\t<span style=\"color: rgb(0, 0, 0);\"><span style=\"font-size: 14px;\"><span style=\"font-family: verdana, geneva, sans-serif;\"><strong>Answered by <\/strong>Mufti Mohammed Tosir Miah<\/span><\/span><\/span>\n<\/p>\n<p style=\"font-size: 13px;\">\n\t<span style=\"color: rgb(0, 0, 0);\"><span style=\"font-size: 14px;\"><strong><span style=\"font-family: verdana, geneva, sans-serif;\">Question:<\/span><\/strong><\/span><\/span>\n<\/p>\n<p>\n\t<span style=\"color:#000000;\"><span style=\"font-size: 14px;\"><span style=\"font-family: verdana,geneva,sans-serif;\">Under the law of our country, all government and armed forces employees are subject to deposit a portion of their salary on monthly basis in Provident Fund Account.&nbsp; In turn, an interest of fixed or a varying rate is added in each employee&rsquo;s account. On retirement, the employee gets his principal amount with interest. &nbsp;In some cases, lower limits for monthly deductions are fixed while no upper limit of deductions exists:<\/span><\/span><\/span>\n<\/p>\n<p>\n\t<span style=\"color:#000000;\"><span style=\"font-size: 14px;\"><span style=\"font-family: verdana,geneva,sans-serif;\">a.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Is interest on provident fund allowed?<\/span><\/span><\/span>\n<\/p>\n<p>\n\t<span style=\"color:#000000;\"><span style=\"font-size: 14px;\"><span style=\"font-family: verdana,geneva,sans-serif;\">b.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; If this interest is not allowed, how can an employee get exemption on forced monthly deductions?<\/span><\/span><\/span>\n<\/p>\n<p>\n\t<span style=\"color:#000000;\"><span style=\"font-size: 14px;\"><span style=\"font-family: verdana,geneva,sans-serif;\">c.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; If an employee wants to be safe and does not get interest on provident fund, how this interest should be accounted for and spent. A regards his principle amount, its value is reduced due to the currency de valuation. How can devaluation be catered<\/span><\/span><\/span>\n<\/p>\n<p style=\"font-size: 13px;\">\n\t<span style=\"color:#000000;\"><span style=\"font-size: 14px;\"><span style=\"font-family: verdana,geneva,sans-serif;\"><strong style=\"font-family: verdana, geneva, sans-serif; font-size: 14px; color: rgb(0, 0, 0); line-height: 1.6em;\">Answer:<\/strong><\/span><\/span><\/span>\n<\/p>\n<p style=\"font-size: 13px;\">\n\t<span style=\"font-size:14px;\"><span style=\"font-family: verdana,geneva,sans-serif;\"><a href=\"http:\/\/daruliftabirmingham.co.uk\/wp-content\/uploads\/2013\/06\/Bismillah.jpg\" rel=\"\" target=\"\" title=\"\"><span style=\"color:#000000;\"><img loading=\"lazy\" alt=\"Bismillah\" class=\"size-full wp-image-6518 alignnone\" height=\"50\" src=\"http:\/\/daruliftabirmingham.co.uk\/wp-content\/uploads\/2013\/06\/Bismillah.jpg\" title=\"\" width=\"267\" \/><\/span><\/a><\/span><\/span>\n<\/p>\n<p>\n\t<span style=\"font-size: 14px;\"><span style=\"color: rgb(0, 0, 0);\"><span style=\"font-family: verdana, geneva, sans-serif;\">In the name of Allah, the most Beneficent, the most Merciful.<\/span><\/span><\/span>\n<\/p>\n<p>\n\t<span style=\"color:#000000;\"><span style=\"font-size: 14px;\"><span style=\"font-family: verdana,geneva,sans-serif;\">The main difference between a pension and provident fund is the following:<\/span><\/span><\/span>\n<\/p>\n<ul>\n<li>\n\t\t<span style=\"color:#000000;\"><span style=\"font-size: 14px;\"><span style=\"font-family: verdana,geneva,sans-serif;\">Under a pension fund at least two-thirds of the final benefit must be paid as a pension for the rest of the pensioner&#39;s life. A maximum of one-third of the final benefit may be taken as cash.<\/span><\/span><\/span>\n\t<\/li>\n<li>\n\t\t<span style=\"font-size:14px;\"><span style=\"font-family: verdana,geneva,sans-serif;\"><span style=\"color:#000000;\">Under a provident fund, the full amount of the benefit available at retirement may be taken as a lump sum cash payment, irrespective of whether the benefit is calculated on a defined benefit or a defined contribution basis. (<\/span><a href=\"http:\/\/www.pension.co.za\/prod5.asp\"><span style=\"color:#000000;\">http:\/\/www.pension.co.za\/prod5.asp<\/span><\/a><span style=\"color:#000000;\">)&nbsp;&nbsp;<\/span><\/span><\/span>\n\t<\/li>\n<\/ul>\n<p>\n\t<span style=\"color:#000000;\"><span style=\"font-size: 14px;\"><span style=\"font-family: verdana,geneva,sans-serif;\">The ruling of a provident fund in Islam is same as that of a pension fund.<\/span><\/span><\/span>\n<\/p>\n<p>\n\t<span style=\"color:#000000;\"><span style=\"font-size: 14px;\"><span style=\"font-family: verdana,geneva,sans-serif;\">The pension scheme might work in the following two ways:<\/span><\/span><\/span>\n<\/p>\n<ol>\n<li>\n\t\t<span style=\"color:#000000;\"><span style=\"font-size: 14px;\"><span style=\"font-family: verdana,geneva,sans-serif;\">The government or the employers by law deduct a certain amount from the employee&rsquo;s salary every month or year etc&hellip; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This would not be considered as riba (interest). It is not a form of insurance where premiums are paid and nor there is an element of gambling or interest involved here.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp; Furthermore, in Shariah legal ownership is not established until the individual or a representative does not claim the possession.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Hence, when a percentage is cut from the wages of this individual without prior permission possession will not be established; therefore, the pension received will be considered as a gift or a bonus.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; However, the problem here is that the money may be invested by the government or the employer to unlawful businesses like banks, alcohol companies, insurance companies etc&hellip; If they invest money into banks or alcohol Companies, then although it will be permissible to take the money as the employee did not have a say or any control of the money, it will be preferred to donate it to the poor without the intention of thawaab (reward). (Raddul-Muhtar p.553 v.9)<\/span><\/span><\/span>\n\t<\/li>\n<li>\n\t\t<span style=\"color:#000000;\"><span style=\"font-size: 14px;\"><span style=\"font-family: verdana,geneva,sans-serif;\">The second possible situation is where the employee undertakes the scheme voluntarily. Mufti Shafee <img title=\"ra\u1e25imahull\u0101h (may All\u0101h have mercy upon him)\" alt=\"ra\u1e25imahull\u0101h (may All\u0101h have mercy upon him)\" class=\"islamic_graphic\" src=\"https:\/\/daruliftabirmingham.co.uk\/wp-content\/plugins\/islamic-graphics\/img\/black\/20\/rahimahu.png\" height=\"12px\"> has written in Nawadir Fiqh, that one should refrain from voluntary pension schemes as these are similarities with riba. (Nawadir Fiqh p.325 v.1)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<\/span><\/span><\/span>\n\t<\/li>\n<\/ol>\n<p>\n\t<span style=\"color:#000000;\"><span style=\"font-size: 14px;\"><span style=\"font-family: verdana,geneva,sans-serif;\">Only Allah Knows Best<\/span><\/span><\/span>\n<\/p>\n<p>\n\t<span style=\"color:#000000;\"><span style=\"font-size: 14px;\"><span style=\"font-family: verdana,geneva,sans-serif;\">Mohammed Tosir Miah<\/span><\/span><\/span>\n<\/p>\n<p>\n\t<span style=\"color:#000000;\"><span style=\"font-size: 14px;\"><span style=\"font-family: verdana,geneva,sans-serif;\">Darul Ifta Birmingham<\/span><\/span><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Fatwa ID: 01582 Answered by Mufti Mohammed Tosir Miah Question: Under the law of our country, all government and armed forces employees are subject to&#8230;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[17],"tags":[],"_links":{"self":[{"href":"https:\/\/daruliftabirmingham.co.uk\/home\/wp-json\/wp\/v2\/posts\/7485"}],"collection":[{"href":"https:\/\/daruliftabirmingham.co.uk\/home\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/daruliftabirmingham.co.uk\/home\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/daruliftabirmingham.co.uk\/home\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/daruliftabirmingham.co.uk\/home\/wp-json\/wp\/v2\/comments?post=7485"}],"version-history":[{"count":0,"href":"https:\/\/daruliftabirmingham.co.uk\/home\/wp-json\/wp\/v2\/posts\/7485\/revisions"}],"wp:attachment":[{"href":"https:\/\/daruliftabirmingham.co.uk\/home\/wp-json\/wp\/v2\/media?parent=7485"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/daruliftabirmingham.co.uk\/home\/wp-json\/wp\/v2\/categories?post=7485"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/daruliftabirmingham.co.uk\/home\/wp-json\/wp\/v2\/tags?post=7485"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}