KWSP money refers to funds from a person’s income derived from their employment, which are deposited into the Employees Provident Fund (KWSP) account under the KWSP Act. KWSP savings are subject to zakat because the concept is similar to regular savings; the only difference is that KWSP savings cannot be withdrawn freely like ordinary savings accounts.
These funds can only be partially withdrawn by the contributor upon reaching a certain age during their employment, or withdrawn in full upon reaching retirement age or pension eligibility. Besides age-based withdrawals, the funds can also be withdrawn after meeting the conditions under various KWSP Withdrawal Schemes.
Quranic Evidence:
وَٱلَّذِينَ يَكْنِزُونَ ٱلذَّهَبَ وَٱلْفِضَّةَ وَلَا يُنفِقُونَهَا فِى سَبِيلِ ٱللَّهِ فَبَشِّرْهُم بِعَذَابٍ أَلِيمٍۢ ٣٤
يَوْمَ يُحْمَىٰ عَلَيْهَا فِى نَارِ جَهَنَّمَ فَتُكْوَىٰ بِهَا جِبَاهُهُمْ وَجُنُوبُهُمْ وَظُهُورُهُمْ ۖ هَٰذَا مَا كَنَزْتُمْ لِأَنفُسِكُمْ فَذُوقُوا۟ مَا كُنتُمْ تَكْنِزُونَ ٣٥
“And those who hoard gold and silver and do not spend it in the way of Allah – give them tidings of a painful punishment. On the Day when it will be heated in the fire of Hell and their foreheads, their flanks, and their backs will be branded with it, (it will be said to them): “This is what you hoarded for yourselves, so taste what you used to hoard.”
(Surah At-Taubah: Ayah 34-35)
Saidina Ali narrated that the Prophet Muhammad (peace be upon him) said:
“If you possess 200 dirhams and it has completed its haul (one full year), its zakat is 5 dirhams. And zakat is not obligatory on gold unless you have 20 dinars (a currency used in ancient Arabia). If you have 20 dinars and it has completed its haul, the zakat is half a dinar. Similarly, the rate applies if its value increases, and zakat is only obligatory on wealth that has completed one full year.”
(Hadith narrated by Abu Dawud)
FATWA UNDER SECTION 47, Under Section 47 of the Administration of Islamic Religion Enactment (State of Selangor) 2003 [En. 1/2003], the Fatwa Committee of the State of Selangor, by order of His Royal Highness the Sultan, issues the fatwa stated in the schedule and published in accordance with subsection 48(6) of the Enactment.
KWSP contributors are encouraged to pay zakat immediately upon receiving or withdrawing their KWSP funds if it reaches the nisab, without waiting for a full one-year haul.
FATWA UNDER SECTION 47, The total KWSP withdrawal subject to zakat includes the entire amount (principal + dividends + bonuses) without needing to separate (no need for purification) any dividends or bonuses that are non-Shariah-compliant. This is because contributors are required to contribute by the government without choice (ijbari). Contributors should not be burdened for actions of the government that are beyond their control.
“And no bearer of burdens will bear the burden of another”
Fatir : 18 dan Al-An’aam 164
The fiqh principle تَصَرُّفُ الْأِمَاِم عَلَى الرَّاعِيَّةِ مَنُوْطٌ بِالْمَصْلَحَةِ (“government actions toward the people must follow the public interest”) allows the management of citizens’ funds by the government under the KWSP Act 1991.
However, if in the future KWSP provides investment options that are Shariah-compliant, contributors who do not choose these Shariah-compliant investments must purify/cleanse the portion that is haram or doubtful by giving it to Baitulmal.
There are two views regarding zakat on KWSP:
Example of KWSP Zakat Calculation
Nisab for year 2012 : RM13 000.00
Mr. Ali, aged 35, withdraws RM20,000 from the Education Withdrawal Scheme.
Zakat payable : RM20,000 X 2.5% = RM500.00
Zakat Selangor Hotline : 1-300-88-4343
Email : maklumbalasaduan@zakatselangor.com.my
