Investing in a government retirement savings program

26-4-2015 | IslamWeb

Question:

Alsalamo Alaykom,I am a 25 year old muslim girl living in Canada, seeking advise in the following matter.I am offered to save money for my retirement by the Canadian government and through my employer. This program is called RRSP (Registered Retirement Savings Plan), this is the government of Canada's definition of this program:"An RRSP is a retirement savings plan that you establish, that we register, and to which you or your spouse or common-law partner contribute. Deductible RRSP contributions can be used to reduce your tax.Any income you earn in the RRSP is usually exempt from tax as long as the funds remain in the plan; you generally have to pay tax when you receive payments from the plan."Also whatever amount I contribute to this program from my paycheque is matched by my employer, so it doubles the amount.Is it HALAL to do this in islam?Thanks for you time and knowledge

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Answer:

All perfect praise be to Allaah, The Lord of the Worlds. I testify that there is none worthy of worship except Allaah, and that Muhammad, sallallaahu ‘alayhi wa sallam, is His Slave and Messenger.

Not enough information about this saving program has been provided to pass fair judgment on the permissibility of joining it. However, if the program involves investing the savings in unlawful activities, it is impermissible to join it as long as it is optional. The benefits mentioned such as tax exemption and the like do not justify joining it. The decisive criterion in this regard is that the funds are not deposited in usurious banks or invested in unlawful activities. Allaah The Exalted says (what means): {O you who have believed, fear Allaah and give up what remains (due to you) of interest, if you should be believers.* And if you do not, then be informed of a war (against you) from Allaah and His Messenger.} [Quran 2:278-279]

Allaah Knows best.