Pension fund including interest.
I am working for a big international organization.
As part of our entitlement a part of our salary is deducted as a pension contribution. The employer also contributes some amount depending on the staff length of service. Both these contributions are fixed. This amount is invested in a joint pension fund of employees. The funds are centrally managed and profit or interest is earned on that. The question here is whether the total amount which will be paid by my organization to me as spension is Halal for me or not. The pension payment from organization at my separation will include my contribution plus employers contribution plus any interest earned on it.
I will be thankful for the guidance in this matter.
In the Name of Allah, the Most Gracious, the Most Merciful.
As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.
As stated in your query, the pension payment from the organization constitutes of your contribution plus employers contribution plus any interest earned on it.
The employer’s contribution to the pension scheme will be permissible, as it will be regarded as a Hiba (gift) on their behalf. However, any interest that has been added to that amount of yours + employer’s contribution will be impermissible. The entire amount of interest accumulated will have to be removed and given away.
If the exact amount of the interest cannot be ascertained, an average amount should be estimated plus some extra, and should be given away.
And Allah Ta’āla Knows Best
Mufti Arshad Ali
Darul Iftaa, Jaamia Madinatul Uloom (Trinidad)