Zakat On Pension And Other Post-Employment Benefit Plans
If they are exempted from taxation by the state, then they will be considered exempted from Zakat as well. But if they are not exempted, then the following treatment would apply to such amounts: Pension and other similar post-employment benefits are subjected to 10% production zakat, however, it only becomes due when you receive the pension. The principle is that for zakat to be due on an asset/earning, it has to be at one’s disposal (tasarruf). If the funds are at your disposal then Zakat will be levied on that amount, initially 10% production zakat on gross amount and if it stays with you till year end and becomes a part of your wealth, then 2.5% Zakat will also be levied being Zakat on Assets/Wealth at year-end. It must be noted that taxes paid to the state in any form are eligible for deduction from Zakat obligation . Please also see for Pension : Discussion 81197 Complete Law of Zakat in summarized form : Discussion 58129 • Reply 58137