A senior lawyer has issued a legal opinion stating that employers must provide halal pension alternatives for their employees otherwise they will be in breach of discrimination legislation.
Paul Newman QC, of Wilberforce Chambers, is one of the foremost authorities in pensions law in the UK. He issued the advice to Ibrahim Khan of Islamic Finance Guru.
His legal judgement said: “My opinion is that a failure to offer such an option… is likely to constitute discrimination for the purposes of the Equalities Act 2010, and that the trustees of the scheme concerned will be obliged by that legislation to rectify the discriminatory conduct by offering such an option to scheme members.”
The vast majority of investment funds used by pension schemes are not compliant with shariah because they invest in assets which generate interest or involve industries considered haraam. It is therefore not possible for Muslim employees to become members of their employer’s scheme if it does not offer the option of halal investment funds.
This puts Muslim employees at a disadvantage compared to non-Muslim employees, given that that non-availability discourages or prevents Muslim employees from joining the pension scheme.
The legal judgement concluded: “Finally, when considering halal investment choices it is important for scheme trustees to offer more than one such fund, so as to enable members to diversify their investments. Trustees who offer only one such fund, and who thereby limit Muslim members to investing in that fund, may expose themselves to claims for maladministration or breach of trust for failing to offer the requisite diversity in the investment options under their scheme.”
Pensions are an essential component to saving for retirement, and without one you could end up retiring into poverty and significantly reducing the quality of your life.
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Your employer is also legally obliged to contribute to your pension as long as you continue contributing too.
But Islamic Finance Guru estimates that approximately a third of Muslims in the UK do not have a pension and it will cost them £13 billion over the course of the next generation.
IFG says that if your employer doesn’t offer a halal pension print out this legal opinion and give it to your HR. Tell them that they are legally required to accommodate.
