Are Retirement Annuities Permissible?

Hanafi Fiqh

Answered by Mawlana Ilyas Patel


Are retirement annuities permissible?


In the Name of Allah, the Most Merciful and Compassionate


An annuity is a contract between you and an insurance company in which you make a lump sum payment or series of payments and, in return, obtain regular payment immediately or at some point in the future. The goal of an annuity is to provide a steady income stream during retirement.


A fixed-term annuity is an insurance contract. From a fiqh perspective, it is an irregular sale contract (bay’ fasid). One does not know where his money may be invested to bring a return. Instead, one is told of a fixed rate of return on his contribution, which is interest. Thus, conventional annuities are not Shar’ia-compliant.

Consider Contributing to a Shar’ia-Compliant Pension Fund 

Watch the video below:
Is Your Pension Halal? | £13 Billion Being Lost by Muslims

I pray this helps with your question.

[Mawlana] Ilyas Patel
Checked and Approved by Shaykh Faraz Rabbani

Mawlana Ilyas Patel is a traditionally-trained scholar who has studied within UK, India, Pakistan, Syria, Jordan and Turkey.

He started his early education in UK. He went onto complete hifz of Qur’an in India, then enrolled into an Islamic seminary in UK where he studied the secular and Alimiyyah sciences. He then travelled to Karachi, Pakistan.

He has been an Imam in Rep of Ireland for a number of years. He has taught hifz of the Qur’an, Tajwid, Fiqh and many other Islamic sciences to both children and adults onsite and online extensively in UK and Ireland. He was teaching at a local Islamic seminary for 12 years in the UK where he was a librarian and a teacher of Islamic sciences.

He currently resides in UK with his wife. His personal interest is love of books and gardening.