Short answer
Retirement savings are permitted if they are invested in compliant assets: shares in lawful companies, Islamic funds, sukuk, rather than bonds or interest-bearing guaranteed funds. Diyanet accepts the Turkish BES under these conditions, as well as the state contribution (2022). A compulsory pay-as-you-go pension is a contribution, not an investment.
What the institutions say
Official positions, with their reference. The badge sums up the institution’s position, not an opinion of Assabile.
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Diyanet Presidency of Religious Affairs, Türkiye (High Council of Religious Affairs)Under conditions
The private pension system (BES) is permitted if the savings are invested in lawful assets; the state contribution may be accepted; believing employees should ask for compliant management.
Decisions 2022/64 (BES) and 2005/64
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International Islamic Fiqh Academy Organisation of Islamic Cooperation, JeddahUnder conditions
The principles apply to retirement savings as to other investments: no bonds or interest-bearing deposits, and shares only in companies with a lawful business.
Resolutions 10 (10/2), 60 (11/6), 63 (1/7)
Positions are reported as they stand; other scholars may hold other views. Method and disclaimers
Depending on your country
- France
- The basic and supplementary pay-as-you-go pensions are not an investment but a system of compulsory contributions. For retirement savings (PER, plan d’épargne retraite), choose self-directed management with compliant unit-linked funds, if the insurer offers them; avoid the euro fund (fonds en euros).
- United Kingdom
- Many workplace pensions offer a Shariah fund (for example Nest’s) that can be chosen instead of the default fund; several providers of personal pensions and SIPPs (self-invested personal pensions) offer one too.
- Türkiye
- Pension companies offer participation funds (katılım emeklilik fonları); Diyanet accepts the state contribution (devlet katkısı).
- United States
- In a 401(k) or an IRA, you can often choose Islamic funds (for example Amana’s, or compliant ETFs): see the fund directory.
- Morocco
- The compulsory pension schemes are pay-as-you-go; takaful savings products are available from authorised operators.
Pay-as-you-go and funded pensions
- Pay-as-you-go (the basic state pension in France, public schemes): your contributions pay current pensions; you do not invest anything yourself. It is a legal obligation, not an investment contract.
- Funded (PER, British pensions, BES, 401(k)): your money is invested. This is where the question of compliance arises.
What is problematic
Default funds often mix bonds, interest-bearing deposits and shares of all kinds; guaranteed funds (such as the euro fund) rest mainly on bonds. For the International Islamic Fiqh Academy, interest-bearing bonds are prohibited (resolution 60 (11/6)) and shares are lawful only in companies with a lawful business (resolution 63 (1/7)).
The solution: choose compliant funds
- Choose a Shariah fund offered by the plan (common in the United Kingdom, Türkiye and the United States).
- Failing that, build your own allocation of Islamic ETFs or funds in a plan that allows it: see the fund directory.
- If the fund does not do so, purify the non-compliant part of the dividends: see the purification tool.
Diyanet ruled BES permissible if the savings are invested in lawful assets, and specifies that the contribution paid by the state may be accepted (decision 2022/64).
What about zakat?
Retirement savings are subject to zakat under their own rules (access to the funds, the share invested in equities): see zakat on investments.
Frequently asked questions
My employer pays into a non-compliant fund: what should I do?
Ask whether there is a Shariah fund in the plan and switch to it; this is often possible at no cost. Diyanet urges employees to ask for their savings to be managed in a compliant way.
Is the state pension halal?
A pension funded by compulsory pay-as-you-go contributions is a social right; it is not treated as interest.