Zakat on Social Security?
Question:
Salaam, Is zakat due and payable on my social security balance annually or it's only due at payable at the time of retirement? Salaam
Answer:
In the Name of Allah, the Most Gracious, the Most Merciful.
As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.
Answer:
In the Name of Allah, the Most Gracious, the Most Merciful.
As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.
We sincerely apologize for our belated response.
Your question refers.
You should firstly review the nature of the social security investment for shariah compliant especially a voluntary plan which you have volitional discretion in adopting a shariah compliant position of your investment.
With regards to your specific query, there are a number of social security investment plans such as the 401k voluntary plan with/without joint contributions from the company, defined benefits plans and fixed contributions plans.
In essence, Zakaat is only due on Zakatable assets which are in one’s complete ownership and possession (Qabdh Taam/Milk Taam). In the case of the social security in question, if you have complete absolute ownership and possession such that you have un-obstructed access to your funds immediately then Zakat will be Wajib on such funds based on your personal Zakat situation. We advise you to also conduct a detailed analysis of the underlying financial structure of the social security investment in reference based on the fund fact sheet for a comprehensive understanding of the Zakatable nature of the underlying financial assets including assets, bonds, fixed term securities, fixed asset/plant and goodwill. In most instances, Zakat in not Wajib on the market capitalization or the trading net asset value (NAV) of the share constituents of the fund.
You are welcome to send us the specific social security plan you refer to so that we can issue a verdict (Fatwa).
And Allah Ta’āla Knows Best
(Mufti) Ismail Desai
Chairman of Shariah Board and Fatwa Committee,
Darul Iftaa, Durban, South Africa
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and Allah Ta'ala Knows Best
Mufti Ismail Desai
Darul Iftaa
Durban, South Africa
Disclaimer The views and opinions expressed in this answer belong only to the author and do not in any way represent or reflect the views of any organizations to which he may be affiliated with. The opinions and educational information proffered in this communication are based on the jurisprudential understanding and available knowledge of the author. Given that contemporary issues and interpretations of contemporary issues are subjective in nature, another scholar may reach different juristic inferences and conclusions to those as expressed by the author. Whilst every effort has been taken to ensure total academic integrity and honesty, the author is open to corrective measures based on sound academics and juristic inferences. The Shari’ah ruling given herein is based specifically on the specific scenario in question. The author bears no responsibility towards any party that acts or does not act on this answer and is exempted from any and all forms of loss or damage. This answer may not be used as evidence in any court of law without prior written consent from the author. Any or all links provided in our emails, answers and articles are restricted to the specific material being cited. Such referencing should not be taken as an endorsement of other contents of that website.
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