No Zakaat on Retirement Money
Fatwa No: 381421

Question

I have been working as a Govt employee for 6 yrs. I have been paying some amount as departmental insurance fund (compulsary) which is returned on pension out or insurance cover paid to the family in case of death. Am I liable to pay zakaah on this amount deposited?

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.

Some scholars are of the view that there is no Zakaat due at all on the amount that is deducted from the salary for retirement.

Shaykh Ibn 'Uthaymeen  may  Allaah  have  mercy  upon  him was asked: “Is there any Zakaat on the money of retirement from the government?

He  may  Allaah  have  mercy  upon  him replied:

There is no Zakaat on the retirement money that is taken from the salary, because its owner cannot withdraw it except under certain conditions. It is like a debt that is due on an insolvent person, and there is no Zakaat on the debt that is on the insolvent. However, once he receives it, it is better to pay Zakaat on it once for one year, in order to be on the safe side.” [End of quote] (Majmoo’ Al-Fataawa)

Allah knows best.

Related Fatwa