Working British Muslims are unknowingly missing out on £11.5bn in pensions due to providers not offering and properly communicating Shariah options, according to Penfold.
According to data from Islamic Finance Guru, 206,720 working British Muslims are missing out on pensions and 80 per cent are unaware of the Shariah compliant options.
Penfold calculated that if the typical person used the provider’s Shariah fund and contributed just £50 per month starting at the age of 25, they could anticipate having a pension pot of £55,755 by the time they turned 67. This indicates that if steered toward pension providers who can provide Shariah-compliant investing options, the 206,720 working Muslims who do not have pensions might collectively hold more than £11.5bn when they reach retirement age.
Penfold says that the data makes it evident that the pensions sector needs to acknowledge the evolution of saver needs. To ensure that no one is denied access to retirement financial security, incumbents must offer options that are compatible with a range of beliefs and values. By offering simple-to-use choices for Shariah-compliant auto-enrolment and SIPP pension solutions, Penfold is taking the lead in serving UK Muslims. In spite of the fact that only 2 per cent of UK workers are Muslims, 5 per cent of Penfold’s clients take advantage of its Shariah investment programme.
Penfold co-founder Pete Hykin says: “The pensions industry is sitting on a ticking time bomb, promising to threaten the financial wellbeing of hundreds of thousands of people. The failure by incumbents to provide pension options that suit the needs of today’s saver is not only unjust, but it’s also a reckless mistake which will have far-reaching consequences if not corrected.
“The industry puts too much time and resource into developments which only benefit a select few. These efforts are misguided, failing to make pensions inclusive and with the customer front of mind. Making sure people are saving enough for retirement is the ultimate goal for the pensions industry, so there needs to be greater progress and emphasis on ensuring there are pension and investment options suited to all.
“With new, innovative pension options, such as Penfold’s Shariah-compliant investment plan, UK Muslims can be sure their pension aligns with their faith while providing financial security post-retirement. Employers and long-term industry incumbents need to follow suit so that Muslims are aware of the options available for securing their long-term financial security.”