What is the ruling of Sharia on selling pension?
Answer:
All perfect praise be to Allah the Lord of the Worlds. May His peace and blessings be upon our Prophet Mohammad and upon all his family and companions.
In principle, pension is a kind of assistance provided by government to employee or other beneficiaries only after service. It could be a form of solidarity between participants; as is the case with social security. Thus, a retiree doesn`t own the pension until after it is paid to him. On this basis, it isn`t permissible to sell the pension for a certain amount or a certain commodity, such as a car and the like. In fact, selling it involves Riba (Usury) because it is selling deferred money (Pension) for advanced money (Amount prepaid). However, when money is paid for by money, it is conditioned that the deal is made on the spot and that the exchanged amounts are equal if they are of the same type. The evidence on this is that ‘Ubada b. as-Samit reported God's Messenger as saying, "Gold is to be paid for by gold, silver by silver, wheat by wheat, barley by barley, dates by dates, and salt by salt, like for like and equal for equal, payment being made on the spot. If these classes differ, sell as you wish if payment is made on the spot.” {Related by Muslim}.
An-Nawawi (May Allah have mercy on him) said: "According to scholarly consensus, it is forbidden to sell gold for deferred gold or silver and the same ruling applies to every two items that share the Illah (The effective or operative cause behind a law) of Riba." {Shareh An-Nawawi Ala Muslim V.11:10}.
Moreover, it is forbidden to exchange/sell the pension for a commodity because this involves ignorance leading to dispute, as the buyer may not collect pensions equal to what he had paid. In some cases, like death of retiree, the pension may be stopped or reduced. Here, there is a huge deal of ignorance of the sold item (Pension); its full amount or value for the coming years isn`t known while Sharia stipulates that the sold item is known since the Prophet (Peace be upon him) forbade aleatory sale. In addition, this transaction involves gambling because the buyer may get the same, less or more than the amount that he had paid, and this is forbidden by Quranic text.
In addition, it is stated in the Shafie book entitled {Umdat As-Salik, P.151}: "A sold item must meet five conditions: pure/clean, can be benefitted from, can be delivered, owned by seller or his delegate, and known."
In conclusion, from the perspective of Islamic Law, it isn`t permissible to sell pension, as this contradicts the considerable conditions of sale, in addition to violating regulations banning this transaction since the aim behind the pension is protecting the rights of the retiree and his/her family. And Allah the Almighty knows best.