Fatwa ID: 06634
Answered by: Mufti Syed Johir Miah
Question:
I have a pension at work and considering joining. It’s a defined benefit pension, where I don’t get a say in where things are invested etc. But I have been advised by someone in HR that generally investments are in things that are ethical.
Is it permissible? If so, is it zakatable? Jazak Allah Khair. It is also a final salary pension through the Railway Pensions.
In the name of Allah, the Most Gracious, the Most Merciful
Answer:
A pension fund, also known as a superannuation fund in some countries, is any plan, fund, or scheme which provides retirement income.
Zakah will be payable on the pension money after it comes into a person’s possession and not while it is still in the scheme.
Zakah will be calculated from the time these funds become available and not prior to that as the ownership (Tamlik) of that wealth is a condition in Zakah.
Hence, if a person was paying Zakah beforehand or on any other assets in their ownership, they will have to include the money they received from the pension fund to their other assets and pay Zakah on the entire amount on the date Zakah is due.
However, if a person was not paying Zakah before this because Zakah was not Fardh on them, they will only pay Zakah on the pension fund after it has been in their possession for 12 Islamic months.
If a person works for such a company which arranges a pension scheme and they make it constraining upon the employee, then the money from that scheme will be permissible for the employee.1
Zakah is obligatory on the free Muslim who is adult and sane when he owns the complete minimum amount of the threshold (nisab), with complete ownership and a lunar year pass over it. 2
If you do not opt out of the pension scheme, then Zakah is not due immediately since there is no access. However, it is money owned so it is still Zakatable, but Zakah will not be scheduled until you have full access (Tamleek) to the money, at which point Zakah is owed for all the past years (i.e., for each year you owned the threshold of Zakah (Nisab) or more). 3
Only Allah (عز و جل) knows best.
Written by Mufti Syed Johir Miah
Checked and approved by Mufti Mohammed Tosir Miah
Darul Ifta Birmingham
1 واما هبة الكافِر للْمُسلمِ فجائزة ايضا سَواء كانَت فِي دار الاسلام اَوْ فِي دار الكفْر
An-Natfu Fil Fatawaa, Sugdee, 521/1, Darul Furqan, Muassisatur Risalah, Amman, Jordan- Beirut, Lebanon, 1404 H.
2 الزكاة: واجبة على الحر المسلم البالغ العاقل إذا ملك نصابا ملكا تاما وحال عليه الحول
Mukhtasarul Quduri, Quduri, 51, Darul Kutub Al-Ilmiyyah, Beirut, Lebanon, 1418 H.
3 (قَوْلُهُ: وكَذا لَوْ عَجَّلَ) التَّشْبِيهُ راجِعٌ إلى المَسْألَةِ الأُولى وهِيَ التَّعْجِيلُ لِسَنَةٍ أوْ سِنِينَ؛ لِأنَّهُ إذا مَلَكَ نِصابًا وأخْرَجَ زَكاتَهُ قَبْلَ أنْ يَحُولَ الحَوْلُ كانَ ذَلِكَ تَعْجِيلًا بَعْدَ وُجُودِ السَّبَبِ لِكَوْنِهِ أداءً قَبْلَ وقْتِ وُجُوبِهِ وهُنا كَذَلِكَ
Raddul Muhtar, Ibn Abidin, 293/2, Darul Fikr, Beirut, Lebanon, 1412 H.
