Salaam what’s the ruling to pensions after death? The defined contribution pension scheme rules dictate it goes to the wife. Should it nonetheless be distributed islamically, or not counted as part of the deceased estate? [Question published as received]
In the Name of Allah, the Most Gracious, the Most Merciful
An investment through a defined contribution pension plans is part of one’s assets, and as such, will be counted among the deceased’s estate.
Defined contribution schemes are an investment plan designed to provide individuals with a source of income during their retirement years. The investment typically consists of both the contribution made by the individual from their salary and the contribution made by the employer. In a defined contribution, the plan holder bears the risk of the investment and has a beneficial interest in the investment. This gives him Milkiyya (ownership) to the defined contribution scheme designated for him.
‘Allāmah Ibn ‘Ābidīn (d. 1252 AH) in his Hashiyah states that assets that are exclusively owned by an individual are considered inheritable wealth. In light of the above, pensions under defined contribution schemes are considered to be personal wealth and are calculated as part of the estate upon death. This is primarily due to the fact that the subscriber of the pension solely holds both the risk, and the benefit factors in the investment.
It is important to note that the laws, regulations, and make-up, governing defined contribution schemes may vary between countries. It is always best practice to consult with local scholars and legal advisors to ensure Shar’ī compliance.
And Almighty Allah Alone Knows Best
Maulana Ammar Y Badat
The views and opinions expressed in this answer belong only to the author and do not in any way represent or reflect the views of any institutions to which he may be affiliated.
Arguments and ideas propounded in this answer are based on the juristic interpretations and reasoning of the author. Given that contemporary issues and interpretations of contemporary issues are subjective in nature, another Mufti may reach different conclusions to the one expressed by the author. Whilst every effort has been taken to ensure total accuracy and soundness from a Shari’ah perspective, the author is open to any correction or juristic guidance. On the event of any juristic shortcomings, the author will retract any or all of the conclusions expressed within this answer.
The Shari’ah ruling given herein is based specifically on the scenario in question. The author bears no responsibility towards any party that acts or does not act on this answer and is exempted from any and all forms of loss or damage. This answer may not be used as evidence in any court of law without prior written consent from the author. Consideration is only given and is restricted to the specific links provided, the author does not endorse nor approve of any other content the website may contain.