I have a question regarding how does the zakat obligation applies to our superannuation savings which we cannot access until the age of retirement. As you know, superannuation contribution is compulsory saving and it accumulates with time. Currently i am not paying any zakat on my superannuation savings as i cannot access it.
My question is when i am able to access it on retirement, do i have to pay the zakat for all the previous years or one year after i could take the money out?
Some people are of the opinion that because we do not have complete ownership of the money in the sense that we could not take it out to pay our zakat on a yearly basis, then we are only obligated to pay zakat on the amount left one year after we can take the superannuation money out. If one has been working for 20 - 30 years, the accumulated zakat if it has to be calculated on the yearly basis is definitely going to be many more times than if it has to be calculated on the lowest balance one year after it could be withdrawn. I appreciate if you can give your fatwa or opinion on this matter.
May Allah swt guide you in your response. Jazakallah khairan.
بِسْمِ اللهِ الرَّحْمنِ الرَّحِيْم
In the Name of Allah, the Most Gracious, the Most Merciful.
Our view is that it is not compulsory to pay zakat on one’s superannuation money until one gains access to it (i.e. when one reaches the age of retirement etc.). And when one does gain access to it, he will not have to pay zakat on it for the previous years; he will merely have to pay zakat on it from then onwards. This is also the view of Mufti Ebrahim Desai, Mufti Emran Vawda and Mufti Munib Ahmad.[i]
Note: The answer above addresses compulsory superannuation. It does not address voluntary superannuation or self-managed superannuation.
And Allah Ta'ala knows best
Mufti Faizal Riza
[i] There are some scholars, however, who take the view that one has to pay zakat on one’s superannuation money every year just like one has to pay zakat on other money in one’s ownership every year, provided that he himself handed over his superannuation money to a particular company in order that the company can invest the money for him. If one wants to act upon this view to be on the safe side, it will be a commendable act.
If, however, one works in an industry where by law he is not allowed to choose a company to invest his superannuation money and his superannuation money automatically goes to a particular company as per the government regulation, then even according to this view he will not have to pay zakat on his superannuation money until he gains access to it. And when he does gain access to it, he will not have to pay zakat on it for the previous years; he will merely have to pay zakat on it from then onwards.