Question:-
Is retirement annuity Zakaatable?
Answer:-
One may subscribe to a retirement annuity fund voluntarily from his side, or a retirement annuity fund may be enforced upon one by his employer.
If one voluntarily subscribes to a retirement annuity fund that is Shariah compliant, then the fund will be Zakaatable. On his stipulated Zakaat date (every year) he should find out the value of the retirement fund from the company and calculate his Zakaat accordingly. He will pay 2.5% of the value of the fund.
N.B. Our Darul Ifta doesn’t approve of any retirement annuity funds.
If the retirement fund is an involuntary fund (which was enforced by one’s employer such as the provident fund), and the funds will only be paid out on maturity (which is generally at the age of 55 or 60), then the fund will not be Zakaatable (before maturity). In this instance, one will only be liable to pay Zakaat after the fund is cashed, and if the money is available on one’s subsequent Zakaat date. If the funds were used before the next stipulated Zakaat date (after maturity), then in this instance, Zakaat will not be payable on the funds.
ALLAH TA’ALA KNOWS BEST!
ANSWERED BY:
Mufti Mohammed Desai
Date: 12 Ramadaan 1443 / 14 April 2022
