Purchasing pensionable service for the past years
Question
I’m a government employee. On a monthly basis there are compulsory deductions to the Government Employees Pension Fund.
There is an option to buy back years of pensionable services. This will result in a larger Pension payout upon retirement/death. Is it permissible to buy back years of pensionable service?
Answer
Under normal circumstances, a voluntary pension fund is not permitted in terms of Shariah. However, when an employer deducts a fixed amount from one’s monthly salary (where the employee has no choice in the matter) and invests it in a pension fund, then the final payout (to the beneficiary of the fund) is considered as gift from the employer to the employee, hence making it permissible to utilize.
In this case, the employee is voluntarily purchasing pensionable service known as a ‘Purchase of service’ in order to attain a bigger retirement payout when the fund matures, or on one’s demise. Hence, such an option will not be permissible.
- Answered by
- Mufti Mohammed Desai
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