Why does one need to pay Zakat on a pension plan if one does not get access till later?
April 14, 2013
Q: I have recently setup a SI pension plan account where I can manage the investment but the principal and the gains are not available to me till the age of 55. Is the investment value still zakatable in the years leading up to age 55?
الجواب حامدا ومصليا ومسلما ومنه الصدق والصواب
A: Zakat is payable once the pension provider receives the pension contribution on behalf of the policy holder. Then, the amount of zakat payable will depend on how the pension contributions are invested. For the purpose of zakat, access to the pension fund is only required to be able to effect an increase by way of investment. However, as the funds are already being invested access to the pension fund is no longer a requirement. Thus, you will remain liable to pay zakat on both the principle and any gains depending on how the funds are invested.