Q: Do I need to pay Zakat on my pension each year or when I start receiving it at the age of 55?
The pension is two fold.
1) My employer contributes £300 per month towards my chosen pension provider.
2) My annual bonus, rather than paying 40% tax on it, is paid to my pension provider, St James Wealth Management.
They have 3 tiers of investments, low, medium and high risk. I have my funds in medium risk and with non pork, gambling alcohol related industries. In essence, the pension contributions go to a series of pension investors, who then invest the funds across numerous funds such as GlaxoSmithKlein, Vodafone, Tesco etc.
الجواب حامدا ومصليا ومنه الصدق والصواب
A: Liability of zakat will depend on the nature of the underlying investment. Assuming that the investment is Shariah-compliant, if the investment is for resale then the entire value of the investment is zakatable. If the investment is for earning an income then only the cash, cash receivables, gold, silver, and trade stock represented in the investment is zakatable. The value of such requires analysis which should be determined with the help of the pension provider or other competent financial adviser.