I work for the local council, and have been enrolled onto the Local Government Pension Scheme. I have tried to find out how the fund is invested, to find if none shariah compliant transactions are involved. Although it is not clear, given how most transactions are based nowadays, it is highly likely interest may be involved. I found the following passage under the Investment Income on the annual report:
Interest income is recognised in the fund account as it accrues, using the effective interest rate of the financial instrument as at the date of acquisition or origination. Income includes the amortisation of any discount or premium, transaction costs or other differences between the initial carrying amount of the instrument and its amount at maturity calculated on an effective interest rate basis”.
Please can you advise the permissibility of the pension scheme? Also, if it is permissible, would you recommend on staying with a pension scheme or opting out, (i.e. is there a chance that it could have an impact on tawakkul later on in life, or am I indirectly hoarding wealth / preparing to live a long life)?