Slms how do you calculate zakat on pension. Is it on cash amount invested or the balance it is showing at the present time. This is locked money until pensionable age so it zakat needed to be taken out. Pls kindly advise Jazakallah
Wa alaykum salaam,
Zakat on Pensions depends on the type of pension it is. If it is a defined benefit scheme, our view is that Zakat is not due. If it is a defined contribution scheme, Zakat is due.
Zakat on the defined contribution scheme depends on the asset composition of the pension portfolio. In essence, you will pay Zakat based on the percentage of Zakatable assets in your pension. This information is available from your fact sheet.
Allah knows best
Salaam Alaikum ,
Can you clarify further what is the difference between a defined benefit scheme and a defined contribution scheme?
What would be the position for the following types of savings for retirement
2/ ISA savings for retirement
3/ Workplace Pensions
The above link highlights the difference.
For Zakat on Pensions, I would recommend the following: