I am school teacher in the UK. We have an optional pension scheme based on final salary. I was wondering if it was permissible. The links arebelow for information on how the pension scheme works.
In the Name of Allah, the Most Gracious, the Most Merciful.
As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.
We apologize for the belated response.
It is important to understand that Islam has laid down a few guiding principles for investments in regards to the distribution of profit and loss that every Muslim must adhere to who contributes (or invests) capital as a partner in any sort of business venture:
(1) A partner must assume the risk of loss
(2) A partner is entitled to a share in the ‘profit’
In regards to pension scheme being offered to you as a teacher, the Department of Education will be acting on your behalf by investing part of your income into the scheme itself. Therefore, under Islamic law, you qualify as being an investor and partner in this scheme. Hence, after studying the links provided by you we realise the scheme being offered to you by the Department of Education violates all three rules of investment mentioned above. As such, it will not be permissible for you to participate in such a program.
And Allah Ta’āla Knows Best
Student Darul Iftaa
Checked and Approved by,
Mufti Ebrahim Desai.
 An Introduction to Islamic Finance by Mufti Muhammad Taqi Uthmani, pg. 22
 Ibid., pg. 27
 Ibid., pg. 50
 Fatawa Haqqaniyyah, vol. 6, pg. 212, Jami’ah Darul Uloom Haqqaniyyah;
Islam Aur Jadeed Ma’ashi Masaail, vol 4, pg. 86-88, Idara-e-Islamiat