Question Summary:
Conventional provident/pension funds are impermissible

Question Detail:

I have been serving NIB Bank in Pakistan for three years (from 2008 to 2011). During the job I was entitled for provident fund facility. Mean some money they deducted from my salary and equal of that deduction was shared by the bank. when I left the job they calculated my provident fund and settled my liabilities with this amount and I was released from service. Now just few days ago, they sent me a letter and informed me that there is an amount of some 12000 rupees against provident fund recalculations, which I can claim as my right and upon providing them my account number, they will transfer that amount to my account. They write it as "Interest on Provident Fund" in the subject line of the letter.My question here is that if this money is Halal to me or Haram? As there is a word "interest" written with it in the letter. I have not responded them so far. So if you can please guide me whether I should accept it or not. My wife is of the opinion that I should take this money and give it to any poor so that he should get some benefit, otherwise it will be retained by the bank. But to my opinion if it is "Riba/sood" then it is Haraam to me and if it is Haraam to me how I can put this hell fire in the hands of my Muslim brother.
I have already sent you a direct email from my personal mail on your mail address, (alfataawa@gmail.com) from which I frequently have been receiving your replies against my questions. In that email I attached the original letter which I received from the bank so that you may have a percise picture to advise me. Here in your website, there is no option to attach a file; so I very humbly request you to go through that email to have a look at exact contents of letter.
I look forward to your kind advise.May Allah guide and bless you with HIS Mercy in both of your lives, kindly pray for me and my parents as well.

Answer :

In the Name of Allah, the Most Gracious, the Most Merciful.
As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuhu
Conventional provident/pension funds are impermissible since the majority of the funds are invested in non-permissible financial products and companies. 
 
In principle, one may participate in a provident fund if one is compelled by company regulations and policies to participate in such a fund. Moreover, the dividends and all other benefits accrued from the provident fund will be permissible and considered as a voluntary offering (Hibah) from the side of the company/employer. One will not be held responsible for taking out the conventional provident/pension fund. 
 
However, if the pension/provident fund is voluntary and one is not compelled by company policies to participate in the fund, then it is not permissible for one to participate in the fund since the majority of the funds are invested in conventional financial products and companies.
 
With regards to your specific query, we understand that the fund was compulsory, therefore the capital amount including the dividends accrued thereof will be permissible and lawful.
 
And Allah Ta’āla Knows Best
Ismail Desai,
Darul Iftaa
 
Checked and Approved,
Mufti Ebrahim Desai.