Zakat

Zakat on Pension Fund Withdrawal?

Question:

How do I calculate my pension fund withdrawal? Should I calculate 2.5% on my withdrawal amount or should I work out the zakaah on each year going back. What is the permissibility of the growth on the contributions?

Answer:

Since the pension in reference is mandatory and you do not have any control over the investments, then the income you receive from this plan will be halal for you to take. The final amount you receive will be counted as part of your salary including all extra amounts you receive upon leaving the company.

With regards to Zakāt on mandatory pension funds, you are neither obligated to pay Zakāt for the previous years nor upon receiving the money. There is no separate Zakāt for monies invested in a mandatory pension fund. At the end of your Zakāt year, the pension amount that you have withdrawn should be added to your assets and Zakāt should be calculated in accordance with that.


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