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ADMINISTRATION OF MUSLIM LAW ACT
(CHAPTER 3, SECTION 32)
FATWA (LEGAL) COMMITTEE, ISLAMIC RELIGIOUS COUNCIL OF SINGAPORE
The Fatwa Committee 2013-2016 has discussed on the issue of paying Zakat for Central Provident Fund (CPF) savings in its 4th meeting on 29th May 2014, 5th meeting on 30th June 2014 and the 6th meeting on 19th August 2014.
بسم الله الرحمن الرحيم
الحمد لله رب العالمين ، والصلاة والسلام على سيد المرسلين وإمام المتقين نبينا محمد وعلى آله وأصحابه أجمعين. اللهم أرنا الحق حقا وارزقنا اتباعه، وأرنا الباطل باطلا وارزقنا اجتنابه . وبعد ،
1. The Muis Fatwa Committee had received a question from Zakat and Wakaf Strategic Unit on the 18th October 2012 on the calculation method for monies kept in the Central Provident Fund (CPF). Although there have been several fatwas issued on the calculation method, the Zakat and Wakaf Strategic Unit requested for the new fatwa to take into consideration the amendments to the CPF Act.
2. One of the key changes entails that members will now no longer be receiving the lump sum of their savings upon reaching the minimum retirement age. This is due to the CPF Minimum Sum scheme, which requires for a minimum amount to be set aside in the account by the time one reaches the retirement age. At the same time, the CPF Act also determined that the minimum sum to be set aside will be increased yearly.
3. The question that was raised by the Zakat and Wakaf Unit was thus this: is zakat obligatory only on excess monies above the minimum sum – which the member receives in lump sum – or is it also obligatory on monies received as monthly payouts? The question then follows: what should be the appropriate calculation method on CPF monies now?
Previous Fatwa Decisions.
4. In taking into consideration one’s needs for his saved monies after retirement age, the Fatwa Committee has decided to review its previous fatwa decisions on this issue.
5. One of the fatwas that discussed on the calculation method of zakat on CPF monies was the one released in 1986, in which the fatwa decided that an individual has complete ownership (milik taam) over his CPF monies throughout the years. So although he did not have access to the money, the obligation to pay zakat still stands. However, because he does not have to the money yet, he can delay this payment of zakat until he reaches the retirement age, upon which he will be receiving the lump sum. The zakat to be paid must be calculated not only for that particular year, but also the previous years – starting from the year the CPF monies reached the nisab. In other words, the calculation method for zakat on CPF monies, based on this fatwa, was to add up the compounded arrears from the year the monies reached the nisab, to the year the member receives the lump sum.
6. In 2003, the Fatwa Committee decided to review this decision. They decided that calculating zakat using the compounded method is only compulsory for those who do not have difficulties paying zakat using this method of calculation. If one finds it burdensome to pay using this method – due to his financial circumstances for example – then one has the option of paying zakat calculated only based on the lump sum received.
Ownership of CPF monies.
On assets in which the owner has no control over.
والله أعلم ، وبالله التوفيق ، وصلى الله على سيدنا محمد وعلى آله وصحبه وسلم
DR MOHAMED FATRIS BAKARAM
MUFTI OF THE REPUBLIC OF SINGAPORE
CHAIRMAN, FATWA COMMITTEE
ISLAMIC RELIGIOUS COUNCIL OF SINGAPORE