Thank you for your recent Pensions campaign. Without it, I would not have gone to the trouble of tracking down and changing my pension fund to Aviva/HSBC Islamic Global Equity Index S6. Alhamdulillah.
I have a bigger concern about the pension market/industry in the UK. I am new to financially educating myself about investing and strongly believe there’s a high chance the pension market will crash, certainly before I reach retirement. It’s simply not sustainable.
Andrew Craig, in his brilliant book How to Own the World, says he would not recommend investing in a UK pension - he cites Argentina as an example where the state confiscated private pension funds to pay its debts. We saw examples of this in Greece too recently - private savers money was raided. The UK government is effectively bankrupt (again according to Craig and other investors/analysts, which I agree with).
I do not believe pensions will look anything like they do right now when I retire and am concerned I’m going to invest for decades only to have some, if not all, of my savings confiscated
The “problem” I have is that my employer matches my contribution by 100%. So this is free money and for now I want to contribute.
Finally to my question: what are the options in terms of transferring my pension funds to a safer vehicle? Are there any general Islamic issues I should be aware of. Can I only do this at the “end” when I am ready to pull out or leave the employer? Ideally, I’d like to take the employer’s contribution and manage the funds in my own investment account.
Thank you
Can you elaborate on what made you think like that?
If its a private pension scheme then I don’t think that it would matter if the UK Govt gets bankrupt as your money would be in private funds. HSBC fund which you are invested at the moment. HSBC is the fund manager and the investments are in individual stocks across the world so hardly any Govt involvement.
On the contrary, if its a defined pension scheme for eg for govt employees like NHS, Teachers etc. then one can argue that if govt gets bankrupt, they may not be able to get their pension …it all depends IF the UK govt go bust
The UK government is essentially bankrupt. There are many economic commentators, like Andrew Craig in How to Own the World, who hold the view that the state will raid private pensions - it’s just too juicy an opportunity. It’s been done before. They will introduce policy to legitimise confiscation of wealth (a nice way of saying theft).
I do think it’s naive and wishful to think pensions we contribute to now will actually pay out what is projected.
History of indulging – why the government will likely raid your pension
As mentioned in How To Own The World this has already happened multiple times in historic and recent times.
Take Argentina for example, in 2008 they simply nationalised $30 billion of private pensions in a single stroke.
Or closer to home in 1997 when Gordon Brown changed the way pension dividends work resulting at least £100 billion being transferred by retirement funds into government coffers.
Or between 2006 and 2016 which has seen the lifetime allowance being reduced by almost 44% resulting in a tax gain to the government of 2000%.
https://www.moneynest.co.uk/pension-crisis-uk/
Assalau Alaykum all,
I wanted to provide an update and news of a win for Muslims in the UK.
I work at a Big Four. All UK employer pension schemes lack sharia compliant funds - with the exception of HSBC Global Islam Index which is 100% equity therefore high risk. What this means is that muslims in the UK have very little choice when it comes to deciding where they would like their pension invested in a responsible way. They either go 100% equities (high risk) or withdraw from their pension. One-third of Muslims don’t have a pension at all and the inability to invest sharia compliant pension schemes is a major contributor.
Since 2021/22 and the IFG pension campaign, I have petitioned my employer (a Big Four) to offer sharia compliant pension options on the grounds of diversity and inclusion. To their credit, they listened, they had follow-up conversations with me to understand the challenges muslims face and our demographics. They then took this challenge on head on. Using their brand power and sway in the financial world, they have pressed big pension providers who they hold relationships with pretty hard.
Result: Aviva have officially approved and launched the Franklin Templeton Global Sukuk fund on their platform! I believe this is the first workplace pension scheme in the UK that allows you to invest in sukuk. This is a major win.
This win means the fund should be available to any UK employer that uses Aviva pensions - not just my employer - so this is has national impact. I am working with my employer to continue to push Standard & Life and Legal & General in their offerings - it is looking optimisitc right now.
We now need to make Muslims aware of the fund and the fact we have two sharia compliant options. Most Muslims, as we noted, tend to opt-out of pensions as soon as they get the chance because they don’t understand them/are worried they aren’t sharia compliant.
I am also pressing my employer to look at other asset classes - like gold, property and other equity funds similar to the HSBC one. The ideal win would be if Muslims have multiple asset classes and funds that they could choose to invest their workplace pension into, rather than going down a SIPP route and probably losing out on employer contributions and causing other complications.
JazakhaAllah Khair to the IFG crew for providing some excellent materials on their website and campaigning for better pension provision for UK muslims. MashaAllah brothers & sisters
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I’m not sure if its been mentioned elsewhere but I invest in this fund via Aegon and I previously saw it available in Legal & General as well.
Aegon HSBC Life Islamic Global Equity (ARC)
I’ll take a look at what you mentioned
edit: I appreciate what you’ve done and yes I agree we should have many different Sharia compliant funds we can invest in with different levels of risk.
Yes the HSBC one is widely available in different pension schemes. The problem is it is 100% equities so you are exposed to one asset class - arguably the riskiest one. The Franklin Global Sukuk fund has not previously been available as far as I’m aware. You could only access it via a SIPP or other ‘private’ account in a very limited way. Investing in sukuk is near impossible in the UK, so with a big pension provider coming on board this is big news.
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Initially I tried to invest in iShares and their Sharia funds but I can’t do that without an IFA and from a brief check it doesn’t seem any IFA is bothered with managing less than 10k of funds in iShares for me.
Do you know what the general view on iShares and their Sharia funds is?
I did a little bit of research here and I’ve found already that not all of the dividends are Sharia compliant and people have to purify the investment?
jazakallah for your efforst for increasing- It would be great that we can have some diversification options on the main stream platforms. Any update/luck with getting alternates with L&G on top of the HSBC global equity fund?