Pensions and Sharia law compliance

Produced by Tolley in association with Penny Cogher

Employment Tax

Guidance

This guidance note looks at Sharia law in the context of workplace pensions and auto-enrolment. It considers the ethical issues and choice of investment funds, as well as the options and obligations for both employee and employer. For employer obligations under auto-enrolment generally, see the Automatic enrolment ― overview guidance note. The types of registered pensions scheme which can be used for workplace pensions are covered in the Pension scheme types guidance note.

Overview

See the Lifetime allowance guidance note.

With a significant proportion of the employed workforce being Muslim, and employers being obliged under auto-enrolment to provide and contribute to a workplace pension, Sharia compliant workplace pension options should be addressed by employers.

Sharia law requires for example acceptable investment options for Muslim employees. This covers a number of factors which must be considered including the nature of the investment and the types of activities in which the investment is made. There are also considerations around the provision of benefits for dependants. These are considered below.

With religious belief being a protected characteristic

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