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“Can I pay zakat on my pension fund?”



He is one of the avid readers of the Friday Sermon. He reads Friday Sermon as a filter for the inanities and contrarieties in our reality. Like other readers of this page, he had diligently followed the sermons of the last few weeks during which time I concentrated on the essence of life and the consequence of death. I remember my sister too, I meant one other reader of this column.

The day I pondered the face of a brother who laid in silence, in death and shared my feelings with you all, she took the message away and farther than I imagined. Then I had asked: “Dear brother, how does it feel to die?” I offered a response then: how does it feel being in alive? Each time we take a breath in order to live, each of those breaths are actually taking us closer to the last breadth we shall have to take. Remember- it is not the number of breadths that we take that matter; rather it is the number of life we breadth into life that will count.

Thus a couple of days ago, our brother decided to send me a reminder. He sought to return my cognition back to the here and now. He said: “The last few weeks’ sermons are so much death-related that it has reawakened our consciousness. Please do oblige on Zakat. Please is my pension fund, which I can even access by law Zakatable if it reaches the nisab? Is a civil servant of say level 12 be obliged to pay zakat in view of the fact that if it is a big one, he can be an employer of labour? Thanks”.

Once again, I appreciate our brother’s intervention. In fact, it was like a wake-up call to us all to be alive to this important aspect of our faith, namely payment of zakat.

The Quran discusses alms giving to the poor in many verses, some of which relate to zakat. These include Quran 7:156, 19:31, 19:55, 21:73, 23:4, 27:3, 30:39, 31:4 and 41:7. Zakat is found in the early Madinah suras and described as obligatory for Muslims. It is given for the sake of salvation. Muslims believe those who give zakat can expect reward from the Almighty in the afterlife, while neglecting to give zakat can result in damnation.

According to Yusuf al-Qaradawi, Quran 9:5 of the Quran makes zakat one of the three prerequisites for a non-Muslim to become Muslims: “but if they repent, establish prayers, and practice zakat they are your brethren in faith”. Some classical jurists have held the view that any Muslim who consciously refuses to pay zakat is an apostate, since the failure to believe that it is a religious duty (fard) is a form of unbelief (kufr). Once collected, it is mandatory that Zakat be given to certain category of people mentioned in Quran 9:60: “Alms are for the poor and the needy, and those employed to administer the (funds); for those whose hearts have been (recently) reconciled (to Truth); for those in bondage and in debt; in the cause of the Almighty; and for the wayfarer: (thus is it) ordained by Almighty, and the Almighty is full of knowledge and wisdom.”. The Prophet is reported to have said, ““The believer’s shade on the Day of Resurrection will be his charity.” (Al-Tirmidhi)

In reference to the specific question of our brother, permit to respond -remember that He, the Almighty, is the most knowledgeable -that Zakat is payable in full on pensions received after retirement. However in regard to monies set aside for pensions before retirement, Zakat would be due for payment if the pension assets are being invested on behalf of the pension holder and if there is a specific quantum of wealth attributed to the pension holder. Though I am acutely aware that the contrary is the case, it is advisable that pension monies are invested in Sharia complaint investment portfolios. In other words, if we can, let us request that our pension fund are managed and invested in businesses that are lawful.

With reference to Muslim civil servants on level 12 and above and those whose salaries are good enough such that, according to our brother they can become employers of labour, there are issues that need careful distillation and attention. In other words, one category of Muslims who run the risk of never paying zakat throughout their active life is salary earners. They receive the salary today, pay outstanding bills, send money to kith and kin, put some in the cooperative societies and before you know it, he is counting down again in expectation of another salary. So what is advisable?

Here on campus, we encourage believers to work with either of the following. One, for those with savings either in banks or cooperative societies, they are under obligation to pay 2.5% percent each year provided the savings are up to the nisab. As for those with the consciousness that should their salaries and perquisites each month be added up, minus their obligations and responsibilities, their earnings per annum would be more than the nisab, then such individuals may pay the zakat rate, namely 2.5% of the net pay, at the end of each month from their salaries. This, we reason, would be in line with the injunction of the Almighty: “Eat from their fruits, and give the due alms on the day of harvest” (Qurran 6: 141). May the little we pay yield great dividends here and there …amin

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