Fatwa No : 29613
Ruling on Provident Fund and Insurance

Ruling on Provident Fund and Insurance

I am working as a senior engineer in Pakistan. I have two import ant questions in mind. 1) Since I have been working in this company, my provident Fund has accumulated a handsome amount of interest, which will keep on increasing during my remaining 12 years of service. Will it be permissible for me to take this upon retirement? 2) My company is providing me with an interest free car loan. After getting the car, it will be mandatory for me to insure the car myself, with my own money. Please inform me as to whether insurance is permissible as per Shari’ah or not. Should I avail this loan?

الجوابُ حامِدا ًو مُصلیِّا ً

1) If the Provident Fund policy has been made mandatory by the company, and an amount is deducted from the employee’s salary in the name of this fund on a monthly basis, then the increase to this amount will be considered as a part of the employee’s salary and it will be permissible for the employee to receive it. However, if this policy is not mandatory, and is voluntarily accepted by the employee, then taking the increase is similar to involving oneself in Riba, therefore it will not be permissible for the employee to take it.
2) Insurance of any type, due to their policies being incompliant with the principles of the Shari'ah, is Haram and must be avoided. However, the Islamic scholars has presented a permissible alternative to insurance knows as Takaful. It would be better for the questioner to benefit from this alternative.
And Allah knows best.

مأخَذُ الفَتوی

* فی البحر: والاجرۃ لا تملک بالعقد) (إلی قولہ) (بل بالتعجیل أو بشرطہ أو بالاستیفاء أو بالتمکن) یعنی لا تملک الاجرۃ الا بواحد من ھذہ الاربعۃ والمراد انہ لا یستحقہا المؤجر الا بذالک اھ ((۷/ ۳۰۰)