Munich Personal RePEc Archive

A Thorn by the Name of Rose: General Provident Fund, Interest Bearing Activityor Tohfa-e-Sultani

Nazir, Nila Nazir and Hameed, Hamidullah and Hussain, Anwar Hussain (2011): A Thorn by the Name of Rose: General Provident Fund, Interest Bearing Activityor Tohfa-e-Sultani. Published in: Journal of Managerial Sciences , Vol. 4, No. 2 (2011): pp. 178-188.

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Abstract

The paper addresses the question of legitimacy of pension fund given by the government of Pakistan to its employees at the time of retirement. The study is based on the hypothesis that since the fund amount is invested by the government in interest bearing investment areas so the profit is not Halal for the employees. But the government employees accept that money by having different justifications. Ulema have also expressed their opinion. The paper incorporates primary data covering the verdicts of the Ulema and of the researchers. Their opinions are then analyzed in the light of government rules and investment areas of General Provident Fund. The results show that the investment and profits of the fund is legitimized by giving different names thus violating the basic spirit of Shariah’s objective for which interest is forbidden. The same practice is carriedon indirectly and the responsibility is ill defined. It is therefore suggested that Ulema should get in depth knowledge of the problem and guide the people by considering different aspects of the matter.

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