QUESTION:
Please refer to the published Fatwa below regarding the beneficiaries of an involuntary provident fund. With regards to a voluntary provident fund, are we allowed to nominate beneficiaries at our discretion?
https://fataawa.co.za/beneficiaries-of-a-provident-fund/
ANSWER:
We are not aware of any provident fund policies that are Shariah compliant, hence one should refrain from voluntarily subscribing to a provident fund. If one has already subscribed to a voluntary provident fund, then benefitting from the total capital invested in the form of premiums is permitted. Any funds over and above the capital invested will be considered as Riba, and will have to be disposed without any intention of reward.
If the policy funds are paid after one’s demise, then the capital will have to be distributed according to the Shari’ee law of succession amongst the heirs of the deceased. Again, the surplus funds (over and above the total premiums) will have to be given in charity without any intention of reward.
In conclusion, if one’s heirs are nominated as beneficiaries in a voluntary provident fund, then they will share the funds (capital only) in accordance with the Shari’ee law of succession, unlike an involuntary provident fund where the policy holder is at liberty to stipulate the beneficiaries at his discretion.
One may also nominate a non-heir as a beneficiary of the fund. However, the bequest in favour of the beneficiary should not exceed one-third of the net estate value.
Re: – Kitaab-un-Nawaazil Vol.18 Pg.166
ALLAH TA’ALA ALONE IN HIS INFINITE KNOWLEDGE KNOWS BEST!
ANSWERED BY:
Maulana Abdul Kader Fazlani
Date: – 19 Safar 1445 / 05 September 2023
CHECKED AND APPROVED BY:
Mufti Mohammed Desai Saheb
