Zakat Question: Zakat on investments in money markets

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#1

Assalamualaykum
I pray you are well

I saw a pension document which was prepared by Mufti Faraz. In that document it mentioned certain proxys which could be used to determine the zakatable assets of a particular fund. The proxy for money markets was 100%. Now I understand that investment into money markets is unlawful, and also understand that 100% are zakatable assets. The question I had was if this investment is unlawful do you have to pay zakat on this? If so on how much.

For example, if £5000 had been invested into these markets would you only pay zakat on £5000 and not more as any profits gained would be unlawful. Also, if a pension is invested into different funds would it possible to work out exactly how much profits have been raised through each fund or are you just provided with a total.

JazakAllah khayr

#2

Wa alaykum salaam,

The entire investment capital would be Zakat at 100%, all profits would have to be given in charity.

It is very difficult to get to the bottom of all the numbers with pension funds, that is why we advocate for a proxy. When it comes to a completely Shariah non-compliant pension, your contribution and your employer’s contribution is the lawful investment capital, any gain beyond that would be unlawful and should be disposed off in charity.

Allah knows best

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