Q&A (Fatwa)

#176: Ruling on the Permissibility of Registering with the Pension Scheme

Sat 3 Dhul Hijjah 1443AH

0 1 minute read

QUESTION

IS IT HALĀL TO REGISTER WITH THE PENSION SCHEME

_” Assalamualaykum. Please is registration with the pension scheme halal or haram?”_

ANSWER

Wa alaykum Salām Warahmatullāh Wabarakātuh

Alhamdulillāh.

To the best of our knowledge, there is nothing Harām in enrolling in a Pension Scheme IF it is a way if investing one’s money for the days of retirement.

There are basically two kinds of Pension Schemes:

🔸 Defined Contribution Pension Scheme:

In this Scheme, what you get after retirement is not specified. Instead you build your own credit with the Administrator of the scheme. Most times, your employer also contributes on your behald. The money is then invested on your behalf. Your amount in the end depends on your contributions, the Scheme’s charges and the state of the Investment.

🔸Defined Benefit Pension Scheme:

In this scheme, your amount is calculated based on a particular formula that considers your length of stay and your salary level. Most government agencies and parastatals use this form of Scheme.

In the Sharī’a, as long as such an agreement is reached by both parties, there is no exploitation to it and no hidden deductions, there is nothing wrong in enrolling.

Allāhu A’alam
Bārakallāhu fīkum
Jazākumullāhu Khayran

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