Ruling on money from India's NPS retirement pension
Fatwa No: 352687

Question

Assalaamu alaykum. I am a government employee in Karnataka, India. There is a new retirement pension scheme called NPS; it is obligatory for everyone. In this plan, 10% of our basic salary is deducted every month, and a same amount is deposited from the govenment side to a separate account. This amount is utilized by the government on the stock market, which I think is unlawful. I will explain it mathematically. Suppose that I have the basic salary of Rs 10,000/month. Rs 1,000 is deducted from my salary every month and Rs 1,000 is also deposited by the govenment on a NPS account, so 2,000 (1,000 from my salary + 1,000 from thegovernment). These Rs 2,000 are used by the government to invest in the stock market. Whatever profit is earned from the stock market is stored in our NPS account, which is locked till our retierment. My question is, as it is a mandatory plan, if I ignore the stock market's profit during my retirement. can I take my contribution plus the government's contribution (i.e. 2,000/month), or should I only take my own contribution( i.e. 1,000/month)?

Answer

All perfect praise be to Allah, The Lord of the worlds. I testify that there is none worthy of worship except Allah and that Muhammad  sallallaahu  `alayhi  wa  sallam ( may  Allaah exalt his mention ) is His slave and Messenger.

There is no harm on you to take what is deducted from your salary as well as what the government has added to what is deducted from you.

As for the excess profits, if you know that it is the result of investing money in what is forbidden – and not all stock market investment is forbidden – then you are not permitted to benefit from it or to leave it (to them); rather, you should take it and spend it on the poor and needy. If you yourself are poor and needy, then it is permissible for you to take from it according to your need only.

An-Nawawi, while quoting Al-Ghazaali, said, “He may also offer it – the forbidden money – in charity to himself and his children if he is poor, because if his children are poor, then they are eligible to receive charity. In fact, they should be the primary benefactors of charity with greater reason, and he himself may avail himself of that money in proportion to his need because he is also poor.

Allah knows best.

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