Question:
Salaam,
How do you calculate the value of your zakatable pension assets?
I understand this is different to the actual value of the pension asset.
Answer:
As-Selamu ‘Aleykum,
There are two ways in which a pension can be funded:
1) Payments are deducted from a salary before it comes into the possession of the contributor.
2) The contributor makes payments from money that has already come into their possession.
If the payments are deducted from the salary at source, so that the money never comes into the possession of the contributor, no zakat is due on the payments, nor is it due on the amount that accumulates in the pension or provident fund.
Zakat will only become payable when money from the fund is paid out and received by the contributor.
If the pension payments are made after the money has come into the possession of the contributor, then zakat is payable on the money that accumulates in the fund.
Answer provided at Zakat-Faq.
Imam Senad Agić
SABAH – Chicago
9920 Grand Ave
Franklin Park IL 60131
