Workplace Pension

Everyday Islamic Finance Business and Career Questions
#1

Assalam u alaikum,

I have a query regarding workplace pension.

At my workplace I was auto-enrolled into the group personal pension scheme. When I looked into the details of the scheme, I noticed that it has two components under the funds section:

  1. Workplace Default Pension fund
  2. Cash

It is a SIPP so I can switch the investment from default to a shariah-compliant fund available with the provider in their online portal. (HSBC Life Islamic Global Equity Index)

Regarding ‘Cash’ it is described as follows on their website: “This is the amount held in your cash facility to pay service charges. Interest is paid on any amount held.” -with 0.25% as the mandatory minimum cash holding.

I am not very clear how the cash holding thing works apart from paying the service charges to the provider.

Does this cash component make the pension scheme haram even though the underlying fund is shariah-compliant?

Best Regards,
Momin Khan

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#2

Wasalam

May Allah bless you.

The money invested in the shariah compliant fund is halal.

The cash which you hold for paying the charges is also halal as it is your own money.

However, any interest accrued on the cash holding must be given away.

And Allah knows best!

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#3

Jazak Allahu Khayran

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