Compulsory Provident Fund


I work for a company which operates a compulsory provident fund scheme. My company deducts 4% from my monthly salary and adds equal amount to it from its funds and then the total 8% is invested into different pension schemes. At the end of the year the company adds 12% (fixed rate) of the total amount accumulated in my provident fund from the start of my service. The same process is repeated every year, till the retirement.

My understanding: The 12% added at the end of the year is company’s strategy to accommodate decreasing value of currency. For employees it is a gift/bonus from company side, employees are not responsible how company earns it, thus making it Halal for them?


In the Name of Allāh, the Most Gracious, the Most Merciful.

As-salāmu ‘alaykum wa-raḥmatullāhi wa-barakātuh.

In principle, one may participate in a provident fund if one is compelled by company regulations and policies to participate in such a fund. Moreover, the ROI (Return on investment) and all other benefits accrued from the provident fund will be permissible and considered as a voluntary offering from the side of the company. Therefore, the annual 12% and all other benefits given by the company are permissible and Halaal.

And Allah Ta‘ālā Knows Best

Moulana Ismail Desai,
Durban, South Africa

Checked and Approved by,
Mufti Ebrahim Desai.

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