Dr. Monzer Kahf, a prominent economist and counselor, states the following: “If interest, whether at a fixed or variable rate, is given on your savings, this interest is certainly Haram and when you withdraw any amount from this Provident Fund, you will need to calculate the amount of interest added to your account and distribute the same to Muslim charities, or directly to the poor. This is of course not considered Sadaqah or Zakah but only cleaning your own money from the Haram (unlawful) money. But if the system of this Fund is such that it gives you certain amount at retirement, disability, etc, (that is not the amounts you saved plus what the government matches it with plus interest) these amounts of retirement and disability, etc. are not based on interest but rather on the actuarial concept and probability studies like insurance. In this case these amounts are permissible regardless of what the management of the Fund does with the money on its hand and how it uses it, on interest basis or on financing projects. Of course, the management of the Fund is required to invest according to Shari’ah and will be sinful if it invests in Riba.”
Accepting Defense Service Officers Provident Fund
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