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Pension Scheme

Answered as per Hanafi Fiqh by Albalagh.net

Pension Scheme

By Mufti Ebrahim Desai

Q.) I have recently joined a UK university as an employee. The university participates in an occupational pension scheme of which every new member automatically becomes a member. Deductions are made from the monthly gross pay at 6%, 9% of the costs born by the employer. The point of question is the validity of the pension. Are Muslims allowed to make contributions towards a pension scheme?

The particular scheme in which the university participates also pays a sum equal to 2 times the gross salary should the member die during the course of his employment to the family i.e. it’s like a life insurance policy, built into the scheme.

In the light of the above, is it permissible to continue paying into the pension? May Allah reward you for your efforts. [Mohammed Sohail -UK]

A.) The monies that the family of the deceased will receive from the pension fund will be regarded as a voluntary gift (tabarru’). It will therefore be permissible to contribute towards this scheme.

And Allah Ta’ala Knows Best

This answer was collected from Albalagh.net, which is an Islamic site with Q&A and articles authored by many world renowned scholars from the Muslim world. Many of Mufti Taqi Uthmani’s fatawa in English are found exclusively on this site.

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