Should I Wait or Purify Impermissible Earnings Immediately?

Answered by Shaykh Muhammad Carr

Question

A small portion of my pension was initially invested in impermissible funds. Can I purify this amount now by removing an equivalent sum from my savings or other investments? Or must I wait to access the pension before removing the amount?

I began contributing to my pension several years ago. However, the first two or three payments were invested in non-Shari‘a-compliant funds. After recently contacting my pension provider and reviewing my historical statements, I discovered that approximately £300 was invested in such a fund.

How should I purify this money? Should I wait until I receive my pension (in around 30 years) and then remove the £300 from it? Or can I purify it now by deducting £300 from other halal sources, such as my ISA or general savings?

Answer

In the Name of Allah, the Most Merciful and Compassionate.

Thank you for your question.

Allah says,

“Vie with headlong speed to a mighty forgiveness from your Lord and a tremendous lush-shaded grove of paradise whose breadth is the heavens and the earth, prepared for the godfearing.” [Quran, 3:133]

You should purify this amount now by removing an equivalent sum from your savings or other investments.

You should give all the profit earned from £300 to charity sooner rather than later. However, the entire capital amount of £300 is yours. Instruct your pension fund manager to invest the £300 in Sharia-compliant investments.

Why Now?

The Prophet (Allah bless him and give him peace) said:

“When I command you to do something, do it to the best of your ability. But when I forbid you from something, abstain altogether.” [Bukhari]

Prohibited earnings are unequivocally forbidden, and we must strive to rid ourselves of them immediately. This contrasts with obligations, for which the Sacred Law allows flexibility and ease.

Proof of Entitlement to Capital

Allah says,

“And if you repent and desist, you may keep your original wealth neither wronging or being wronged.” [Quran, 2:279]

Imam Ahmad understood the doubtful matters (shubuhat) mentioned in the Prophetic narrations to refer to situations involving a mixture of the lawful and the unlawful. According to most scholars, the ruling is that the unlawful portion must be removed, and the remainder is deemed permissible, regardless of whether the impermissible part is small or large. [Ibn Hajar, al-Fath al-Mubin Sharh al-‘Arba‘in]

Absolving Yourself by Deducting

It is permissible for you to pay from elsewhere, as money (nuqud) is very seldom specified. Amounts are simply ascertained. Thus, the impermissible earnings are not in rem and may be given from elsewhere.

Knowingly entering into an invalid transaction is impermissible. [Suyuti, Ashbah]

Impermissible Income

For an investment to be Sharia-compliant, its core business activities must adhere to Islamic law. All returns earned from wholly impermissible activities must be given to charity.

If the company generates no impermissible income, applying NPI (Non-Permissible Income) filters is unnecessary, and the entire dividend is halal.

However, many companies have other impermissible income streams. These include FI (Financial Income) or investment income, which is interest earned on cash held in the bank. The percentage of profits that reflect impermissible income must be given to charity.

General Rule of Impermissible Income

The general rule that applies to disposing of unlawful funds is as follows:

1. Where the rightful owner is known, it must be returned to the rightful owner.
2. Where the rightful owner is not known [or if they refuse], the funds must be disposed of in one of two ways: a) it must either be given towards a charitable cause that benefits the public at large, such as public hospitals, schools, or mosques; b) or it should be given in charity to a person who is entitled by his need to receive charity. [Nawawi, Majmu‘ Sharh al-Muhadhdhab; Karaan, Disposal of Riba (Fatwa issued by the MJC)]

I pray this is of benefit and that Allah guides us all.
[Shaykh] Muhammad Carr
Checked and Approved by Shaykh Faraz Rabbani

Shaykh Muhammad Carr has dedicated his life to studying and transmitting our beautiful deen. His studies have taken him around the globe, where he has benefitted from many luminaries. Under the guidance of his teachers – Shaykh Taha Karan, Shaykh Yaseen Abbas, Shaykh Muadh Ali, and many others – Shaykh Muhammad has grown to appreciate the beauty and benefits of diverse scholarship. He completed his memorization of the Qur’an at Dar al-Ulum Zakariyyah in September 1997 and received an Alimiyya Degree in 2006 from DUAI (Darul Ulum al-Arabiyyah al-Islamiyyah). He is also affiliated with Masjid Auwal in Bo Kaap, Cape Town (the oldest mosque in South Africa), where he serves as a co-imam, and Dar Al-Safa, where he has taught since 2018. As a teacher, he imparts the wisdom of our heritage and tradition by opening the door to students. As an imam, he has the unique opportunity to serve his community in daily life.

In addition to his roles as a teacher and imam, Shaykh Muhammad Carr has contributed significantly to the administrative and advisory aspects of Islamic institutions. Since 2023, he has served as the Administrative Director at The Imam Kurani Institute, contributing to the institution’s growth and development. He continues to pursue traditional Islamic Sciences, possessing a keen interest in Islamic Contract Law and Finance. Shaykh Muhammad has been a Shari‘a Board Member for Islamic Asset Management & Insurance Companies since 2001, aligning financial practices with Islamic principles.