The Shari'ah Status of Deductions Made Under the Name of Provident Fund

What do the esteemed scholars say regarding the following issue: A government employee is subject to mandatory monthly deductions by the government under the DSP (Provident) Fund. Upon retirement, an annual profit ranging from 13% to 15% is given on this amount. Is it permissible to take this profit received after the completion of service? Additionally, if the employee voluntarily opts for a higher deduction (which is not mandatory by the government), and the same profit rate (13% to 15%) is also applied to that amount — is receiving this profit permissible or not? Kindly respond in accordance with the Qur’an and Sunnah, and allow me the opportunity to be thankful.

الجوابُ حامِدا ًو مُصلیِّا ً

It has been learned from the questioner that the DSP Fund is simply another name for the Provident Fund. The ruling regarding it requires some detail: If the fund is deducted compulsorily, then the amount given at the end of service under the title of “profit” (ranging from 13% to 15%) does not fall under the category of interest (riba). Rather, from a Shari'ah perspective, it is considered a part of the employee’s wages. Therefore, taking it and using it for personal needs is undoubtedly permissible and valid. However, if one voluntarily contributes to the fund, then receiving annual profit or profit upon completion of service should be avoided.

مأخَذُ الفَتوی

قال في البحر الرائق : البحر الرائق شرح كنز الدقائق: (قوله بل بالتعجيل أو بشرطه أو بالاستيفاء أو بالتمكن) يعني لا يملك الأجرة إلا بواحد من هذه الأربعة والمراد أنه لا يستحقها المؤجر إلا بذلك كما أشار إليه القدوري في مختصره لأنها لو كانت دينا لا يقال أنه ملكه المؤجر قبل قبضه وإذا استحقها المؤجر قبل قبضها فله المطالبة بها وحبس المستأجر عليها وحبس العين عنه وله حق الفسخ إن لم يعجل له المستأجر كذا في المحيط لكن ليس له بيعها قبل قبضها اھ (7/ 300)۔