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Islamic Dilemma: Transfer or Withdraw Provident Fund After Resigning?

Answered as per Hanafi Fiqh by Muftionline.co.za

Q: My question is related to provident fund. I have resigned from my current job and inshaallah would be joining another company within short time. Till the time I resign I had no control on my provident fund money (as usual employer was deducting a portion of salary as PF) now due to resignation I have 2 options for the amount of money which is there in my PF account.

  1. I can transfer my PF money to new account which will be maintained by my new company. This will give the benefit of compounded interest earned and going further if I complete certain years I will be getting additional pension benefits and tax savings.
  2. I can withdraw the currently accumulated PF money and use it, through the new company I have to open new account starting with zero balance. Later as part of salary PF portion will be put in by company.

I have read that interest earned on PF is gift as employee does not have control (ikhtiyar) on the money deducted by employer, in above mentioned
options I feel that option-1 is like Voluntary PF as (due to resignation I have control or choice it to withdraw ) but considering the compounded
interest and other benefits im willingly putting my money to new employers new PF account and according to FIQH voluntary PF is not allowed.

Please guide me in the light of Quran and Sunnah to which of the option to choose from and whether transferring the PF money (option-1) will be haraam as it includes interest earning by choice.


A: We suggest that you end the past contract.

And Allah Ta’ala (الله تعالى) knows best.

Answered by:

Mufti Ebrahim Salejee (Isipingo Beach)

This answer was collected from MuftiOnline.co.za, where the questions have been answered by Mufti Zakaria Makada (Hafizahullah), who is currently a senior lecturer in the science of Hadith and Fiqh at Madrasah Ta’leemuddeen, Isipingo Beach, South Africa.

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