HSBC launches Islamic law pension
16 April 2004
HSBC has announced it is to offer a new pension scheme specifically aimed at Muslims.
The fund, which complies with Islamic laws, will enable employers and Muslim investors to find a path through the considerable restrictions on the financial services they can use.
It will be the first opportunity for the UK's two million strong Islamic community to invest in a pension fund that conforms with their religious beliefs.
At present it is difficult for Muslims to receive the benefits offered by pension schemes as they are deemed to be interest income, the receiving of which is strictly prohibited by religious laws.
Any dealings with breweries and distilleries, casinos, publishers of pornography, producers of pork products, tobacco, and conventional financial services businesses contravene the law laid down by the Islamic faith.
A panel of Islamic scholars, however, has approved this pension scheme, because the proceeds of these activities will be redistributed to charity, effectively "purifying" the funds.
HSBC cites this new scheme as displaying their ability to draw knowledge from its global network and apply it at a local level, and believes the segmentation of clients will give it an advantage over competitors.
The government has announced its desire to promote saving among the Muslim population in the UK. The predominantly Muslim Pakistani and Bangladeshi communities currently draw only four per cent of their income from pensions, the lowest of any ethnic group in the UK.