Question Summary:
I recently received my provident fund after 2 years of service to a company. …am i allowed to take out mine and the company’s contribution and utilise for my use ???

Question Detail:

I recently received my provident fund after 2 years of service to a company. included in this amount is my contribution, company contribution and the interest earned.
am i allowed to take out mine and the company's contribution and utilise for my use ??? if so ,what may i do with the interest earned ???

Answer :

In the name of Allah, Most Gracious, Most Merciful
Assalaamu `alaykum waRahmatullahi Wabarakatuh
According to our understanding, there are two ways that the provident fund functions. One type is where the company itself deducts a certain amount of the employee’s salary, adds a certain amount from their side and thereafter invests the total amount in an interest –bearing scheme. The total amount received from this type of provident fund is permissible and the excess amount received upon the investment will not be considered as interest on behalf of the employee, rather, the entire amount will be considered as a bonus or gift from the side of the employer.
The second type of provident fund is where the employee enters into the fund volitionally and requests the company to deduct a percentage of his wages for the fund. In this scenario, the excess amount earned upon the joint investment will be considered as interest from both the employee and employer. In such a scenario, it will not be permissible to keep any amount of interest accrued. One may only keep his initial investment and the company’s contribution without the accrual of any interest.
And Allah knows best
Wassalam
Ml. Yusuf bin Yaqub,
Student Darul Iftaa
Checked and Approved by:
Mufti Ebrahim Desai
Darul Iftaa, Madrassah In'aamiyyah