Are provident funds halal or haram?

Answered according to Hanafi Fiqh by

Answered by Shaykh Ilyas Patel

Are provident funds halal or haram?

In the Name of Allah, Most Gracious, Most Merciful

In the name of Allah Most Compassionate Merciful

I hope you are fine and in the best of health and iman.

There are three types of funds given to the employer in a provident fund. First, is the accumulated wealth of a person. Second is the funds given to by the government, and third is the additional fund on top of them which the government terms it interest. The scholars say, all these three types of funds are permissible for the employer and there is no wrong in using them. Because the funds which are deducted from the employer�s salary are his, and more additional funds are contributed to it, as this was acknowledged during one�s employment. So it will be considered part of one�s salary. As for the fund which the government terms it interest, is not interest at all. This is an additional amount from the employee as a gift and additional benefit.

(Mawlana Khalid Saifullah Rahmani, Jadid Fiqhi Masa�il pg 423 V.1)

And Allah alone knows best

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