The Employee Savings Fund
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Fatwa No. ( 13733 )
Q: We are employees in the public sector in one of the institutions, and we are compulsorily enrolled in a fund called the Employee Savings Fund . It has instructions and principles that state the following: 1- An amount equal to 10% of the employee's basic salary is deducted on a monthly basis. 2- The institution contributes the same share, i.e., 10%, as its contribution to the employee, and this is one of the incentives the institution provides for its employees. 3- This institution operates and invests these funds in various projects and transactions, such as: - Buying and selling stocks, which may be for public institutions such as hotels and rest houses that may deal in what is wrong, or industrial companies for permissible industries, etc. They may also be stocks of insurance companies or banks. - Placing deposits in banks with riba (usury or interest) interest. - Buying and selling paper currency and various currencies. - Buying government development bonds and riba (usury or interest) interest-bearing lending bonds. From this, the institution realizes annual profits or losses, and the
distribution of profit or loss is made to the shareholders in this fund, according to their participation ratios in the fund's capital. That is, the total savings of the employee may increase or decrease according to the profit or loss. A annual report is also issued detailing the fund's accounts in terms of contributions, profits, and losses, as clarified in Attachment (1). Each employee is also provided with an annual statement showing the employee's accounts in terms of: a) The employee's contribution to the fund up to that date. b) The institution's contribution to the fund up to that date. c) The realized profits or losses for each of (a) and (b) above. This is clarified in Attachment (2). The profits of the industrial companies have been separated from the other profits resulting from clear riba (usury or interest) transactions. It is known that we cannot know how the industrial companies operated, or the extent to which the halal (lawful) and haram (forbidden) are mixed in that, since from a principled standpoint, most of the participating industrial companies deal with riba (usury or interest) banks, whether through deposit, borrowing, or otherwise. In light of the above, we turn to your eminence with the following questions so that we may be clear about our matter, and so that each of us may be free of blame regarding his religion and his honor: What is the ruling on such funds from the Sharia'ah (Islamic sacred law) perspective?
A : If the situation is as described in the question, it is not permissible to participate
in this fund; because of the forbidden transactions it contains.
Q: We are employees in the public sector in one of the institutions, and we are compulsorily enrolled in a fund called the Employee Savings Fund . It has instructions and principles that state the following: 1- An amount equal to 10% of the employee's basic salary is deducted on a monthly basis. 2- The institution contributes the same share, i.e., 10%, as its contribution to the employee, and this is one of the incentives the institution provides for its employees. 3- This institution operates and invests these funds in various projects and transactions, such as: - Buying and selling stocks, which may be for public institutions such as hotels and rest houses that may deal in what is wrong, or industrial companies for permissible industries, etc. They may also be stocks of insurance companies or banks. - Placing deposits in banks with riba (usury or interest) interest. - Buying and selling paper currency and various currencies. - Buying government development bonds and riba (usury or interest) interest-bearing lending bonds. From this, the institution realizes annual profits or losses, and the
distribution of profit or loss is made to the shareholders in this fund, according to their participation ratios in the fund's capital. That is, the total savings of the employee may increase or decrease according to the profit or loss. A annual report is also issued detailing the fund's accounts in terms of contributions, profits, and losses, as clarified in Attachment (1). Each employee is also provided with an annual statement showing the employee's accounts in terms of: a) The employee's contribution to the fund up to that date. b) The institution's contribution to the fund up to that date. c) The realized profits or losses for each of (a) and (b) above. This is clarified in Attachment (2). The profits of the industrial companies have been separated from the other profits resulting from clear riba (usury or interest) transactions. It is known that we cannot know how the industrial companies operated, or the extent to which the halal (lawful) and haram (forbidden) are mixed in that, since from a principled standpoint, most of the participating industrial companies deal with riba (usury or interest) banks, whether through deposit, borrowing, or otherwise. In light of the above, we turn to your eminence with the following questions so that we may be clear about our matter, and so that each of us may be free of blame regarding his religion and his honor: What is the ruling on such funds from the Sharia'ah (Islamic sacred law) perspective?
A : If the situation is as described in the question, it is not permissible to participate
in this fund; because of the forbidden transactions it contains.
Source
www.alifta.gov.sa
The Arabic text is copied verbatim from the original source, without any edits.