All praised is due to Allah, the Lord of the Worlds, the most Beneficent, the most Merciful, Master of the day of Judgment and his last prophet Mohammed (S.A.W) & his companion.
Employee Provident Fund (EPF) is a little “Peace of Mind” for the employees of institutions and establishments of the Private Sector, State Sponsored Corporations, Statutory Boards and Private Business. The aim of the EPF is to assure financial stability to the employee in the winter of life and to reward the employee for his or her role in the economic growth of the country.
Employee Trust Fund (ETF) is that all Private and Semi Government Sector Employers contribute 3% of the gross salary of their employees monthly to the Fund while the Fund implements a range of social and welfare benefits to the members during their employment.
The both EPF and ETF ownership does not belong to employee until they receive the lump sum at their maturity since the collection for those funds are mandatory by the government body. The government invests the fund productively in various development project, offer certain percentage along with contributed amount at the maturity as a reward for the employee to assure financial stability to the employee in the winter of life. The amount earned as interest on compulsory provident fund distribution does not fall in the admit of riba (interest) but can be considered a part of employee’s salary. It is therefore legitimate to receive this amount and use it for one’s personal needs.
However, if contribution to the provident fund is on a voluntary basis, then the amount earned as interest is quiet similar to riba and is likely to become the means to earning interest. It is therefore recommended that the employee should forego amount of interest and accept the principal only.
All mighty Allah (Peace be upon him) knows the best.
Ash-Sheikh M.A. Mubarak (Ghafoori)
General Secretary
All Ceylon Jamiyyathul Ulama
Mufti M.I.M. Rizwe
President
All Ceylon Jamiyyathul Ulama
