Pension Scheme - 99.75% halal and 0.25% in an interest bearing account

Everyday Islamic Finance Business and Career Questions
#1

Hello,

I have a question with relation to Islamic Sharia Compliant Pensions.

My employer provides a Pension Scheme with Aegon who offer a ‘Sharia Compliant’ pension fund, but this comes with a caveat which confuses me.

Aegon HSBC Life Islamic Global Equity (ARC). This fund does cover the caveat that the product the fund is selected through may not comply with Sharia Law

On ARC, members are invested in to their chosen fund 99.75%. The remaining 0.25% is held in cash to pay for the charges associated with the contract. It is covered in the T&C’s for ARC that the cash facility has a 0.1% interest return on it. So if someone had a savings pot of £100k then this is £250.00 in cash making 25p per year interest. Whilst this is a nominal amount it does mean that the contract itself does not meet Sharia Law requirements whilst the fund does.

Aegon offered Sharia compliant funds eg: Aegon HSBC Life Islamic Global Equity (ARC), however the issue is the ARC platform. Members on ARC have 0.25% of their investment placed in a cash fund for charges. This cash fund has a nominal interest rate of 0.10% meaning the contract is not compliant while the fund is.

Can someone please advise if it would be halal to invest in such funds?

Many thanks.

1 Like
#2

Salam @Mufti_Faraz_Adam @Mufti_Billal,

Any chance you could provide your opinion on this issue please. I have currently opted out of this same plan but I wanted to know if it is a viable option for the future.

Jzk Khair,

Abdul Qadeer

#3

Wa alaykum salaam,

Generally, such amounts are excused and any interest earned should be purified. The interest is derived from non-operating income and not operating income. Further, many such funds are limited to the type of account they can use.

Allah knows best

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#4

Salam, is this interest provided annually?

I wasn’t aware of this.

Additionally do Aegon provide a Certificate of Interest yearly for the account? My bank Natwest does this for each statement period and that is how I cleanse the interest money.

I guess I will ask Aegon.