Are pensions halal?

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Firstly, I think one needs to consider where their pensions are invested in. If we don’t know, we should find out

Once contacting one’s HR, if the funds are invested in a halal fund, that should be fine

If not (I assume this is the case for a lot of people) it would be time to find out how to get one’s employer to invest in a halal fund or take the money out

As I understand it, most pension schemes work on the basis of interest and are thus haram.

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This is Shaykh Akram’s view on pensions:

Although shaykh here is addressing employer contributions. Your contribution+ the employer contribution are either invested or used for loans.

I would imagine if the money is invested in a halal manner then there’s no reason for it to be necessarily Haram

Though I’ve seen a lot of people assume it’s Halal by default and just go in with it. You need to make sure your employer is offering a halal plan and then ensure it is selected

Also this is going to ruffle a few feathers but… I think pensions are massively overrated and imo if you have to rely on pensions to survive then you’ve failed at investing and failed at managing your money

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I have to say I totally disagree. Your initial investments should be in your pension. Think about it, long-term investment, thus serious compounding. Employer contribution (which you should match). Then the tax benefits.

Your investments should start with pensions and from there go to an ISA with index funds, and if you have money spare after that you can either open a taxable investment account or diversify your portfolio with real estate, venture capital, etc.

I don’t discount the compounding nature nor the benefit of employer contributions

I just feel like that money completely being locked away for a person until they reach a significantly older age is highly restrictive

my pension at the civil service was amazing, I was also instructed by a lot of senior members that the pensions from the CS were generally halal. I didn’t look into it much, to be honest.

It is a safety measure, fair enough we are not guaranteed a future, but at the same time, we are not guaranteed a future with funding, we gotta tie the camel somehow and its not that much being added onto the pension, its small costs, going into a big saving, which will eventually help and support you if need be, if you don’t need it then… it is just extra money. I see it as a win win situation

Yes, I really need to this, jazakum allahu khairan for reminding me of this. Everything is conditional it seems nowadays.

I agree it’sa safety but at a cost. The cost being not having that money and being able to use it until you are eligible for receiving the pension.

I believe that if one kept the money and invested it themselves into index funds not only would they make more money in the same time period but it would also be liquid and not locked away until your too old to reap its benefits

This is fair, I completely agree with this tbf, I am convinced about this, however, the only thing is, I would be in possession and in control of my money… which isn’t good because I will be too stingy to actually put it there, which sounds sooo silly, I realise this, but that automatic pension without the hassle and ease of mind, really puts it into perspective… at least for me. I just gotta stop being stingy!!

This is a very interesting watch, jazakum allahu khairan, although very short, I think we require a longer explanation.

What would you like to know?

I have been contemplating this- whether it’s worth actually using the money yourself to invest