A new auto-enrolment scheme for Muslim staff has been devised to tackle problems that have arisen with compromising their religious beliefs.
The Islamic Bank of Britain has accredited a new fully Sharia compliant auto-enrolment Pension Scheme after increasing demand.
The Islamic Pension has been launched to address the need for a Sharia compliant pension scheme to meet the criteria for automatic enrolment, as defined by the Government.
The automatic enrolment legislation in 2012 had presented a dilemma for employers with Muslim workers.
In the absence of a fully Sharia compliant scheme to use for auto-enrolment, complying with the law required enrolling employees in a conventional pension scheme.
As Islamic law prohibits the payment and receipt of interest and promotes profit sharing, Muslims are prevented from investing in some equities and therefore the pension funds that contain them.
Whilst shares and dividends are acceptable under Islamic law, speculation is not.
A large proportion of the Muslim population are eligible employees for auto-enrolment.
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Sultan Choudhury, chief executive and director of the IBB, said: "We can all appreciate the importance of sensible Financial Planning for our future, but until now it has not been possible for employers in the UK to enrol their Muslim employees into a workplace pension scheme without compromising their beliefs.
"The launch of the Islamic Pension Trust has changed that, as it enables British Muslim employers and charities to provide a fully Sharia compliant workplace pension that meets all of the Government's criteria for an auto-enrolment scheme."
The trust was developed by Carey Pensions UK, with guidance from IBB's specialist Sharia compliance department on how it should be structured.