Question

Asalamu Alaykum,

I pray this message finds you in good health.

Recently, I have become aware of a pension plan that involves significant involvement in Bonds. However, the recipient of this pension plan did not know about this involvement until very recently.

1. A) Does the recipient have to dispose of their gain from bond securities despite them not knowing they were invested in them?

If answer to 1. A) is Yes, please refer to question 1. B)

B) Since bonds accumulate value through two methods (interest and capital gain) how should the recipient calculate his impermissible value? Using both the calculated total gain of both interest and capital gain, or just through the interest received?

2. Within the pension fund, there are also significant equity and property assets which the recipient has paid on zakat on previously. However, the zakat paid on these two securities over the past 8 years is substantially greater than what they needed to pay due to miscalculation, unbeknownst to them. Can the recipient deduct the zakat that they overpaid in previous years in future zakat calculations?

Answer

There are two types of pensions funds; defined benefit and defined contribution. In a defined contribution it does not matter where the funds have been invested. The employee is not considered the owner of the wealth until it is returned back to them. Hence, in this case it will be permissible to take whatever returns are provided after retirement regardless of how they were invested.

As for a defined contribution scheme, the employee is considered the owner of the wealth. Hence, they must ensure that the funds are invested in a permissible manner. If not, they will have to dispose of the unlawful earnings.

1A. The unlawful earnings from a defined contribution scheme must be disposed of, regardless of whether or not the person knew where the fund was invested.

1B. Any sum beyond the initial contribution will be unlawful.

2. Yes, if more zakat has been paid in one year, then the additional payments can be considered an advance for future zakat payments.

الفتاوى الهندية (1/ 176)
وَيَجُوزُ تَعْجِيلُ الزَّكَاةِ بَعْدَ مِلْكِ النِّصَابِ، وَلَا يَجُوزُ قَبْلَهُ كَذَا فِي الْخُلَاصَةِ. وَإِنَّمَا يَجُوزُ التَّعْجِيلُ بِثَلَاثَةِ شُرُوطٍ أَحَدُهَا أَنْ يَكُونَ الْحَوْلُ مُنْعَقِدًا عَلَيْهِ وَقْتَ التَّعْجِيلِ. وَالثَّانِي أَنْ يَكُونَ النِّصَابُ الَّذِي أَدَّى عَنْهُ كَامِلًا فِي آخِرِ الْحَوْلِ. وَالثَّالِثُ أَنْ لَا يَفُوتَ أَصْلُهُ فِيمَا بَيْنَ ذَلِكَ فَإِذَا كَانَ لَهُ النِّصَابُ مِنْ الذَّهَبِ أَوْ الْفِضَّةِ أَوْ أَمْوَالِ التِّجَارَةِ أَقَلَّ مِنْ الْمِائَتَيْنِ فَعَجَّلَ الزَّكَاةَ ثُمَّ كَمَّلَ النِّصَابَ أَوْ كَانَتْ لَهُ مِائَتَا دِرْهَمٍ أَوْ عُرُوضٌ لِلتِّجَارَةِ قِيمَتُهَا مِائَتَا دِرْهَمٍ فَتَصَدَّقَ بِالْخَمْسَةِ عَنْ الزَّكَاةِ وَانْتَقَصَ النِّصَابُ حَتَّى حَالَ عَلَيْهِ الْحَوْلُ وَالنِّصَابُ نَاقِصٌ أَوْ كَانَ النِّصَابُ كَامِلًا وَقْتَ التَّعْجِيلِ ثُمَّ هَلَكَ جَمِيعُ الْمَالِ صَارَ مَا عَجَّلَ بِهِ تَطَوُّعًا هَكَذَا فِي شَرْحِ الطَّحَاوِيِّ

Answered by:
Ifta Research Fellow

Checked & Approved by:
Mufti Abdul Rahman Mangera
Mufti Zubair Patel