Most South African fatwa bodies draw one line through retirement savings: a compulsory employer pension or provident fund carries no zakat while you are a member, and a voluntary retirement annuity carries zakat every year at 2.5% of its value. That is the published position of the Jamiatul Ulama KZN, of Mufti Mohammed Desai at Fataawa.co.za, of Durban attorney M S Omar, and of SANZAF's national chairperson. A dissenting Darul Ifta view defers zakat on both until the money is paid out. On 29 September 2026 SANZAF put the silver nisab at R19,955.47 and the gold nisab at R193,599.72, so under the majority view almost any RA above R20,000 is in scope.
Ready to compare halal options?
Why 'compulsory or voluntary' decides the answer
Zakat is due on wealth you own completely and can dispose of. The South African rulings turn on whether a retirement fund member has that kind of ownership. M S Omar's analysis, published on his firm's site and closing with a citation of Mufti Taqi Usmani, holds that a contribution deducted at source under a contract of employment is not deemed to be owned by the employee, who merely has a valid claim to it. A voluntary RA is different: the member chose to lock the money away, and Omar treats it as analogous to a fixed deposit or bond for a predetermined period, on which zakat is due annually even though the capital cannot be touched before 55.
That reasoning explains why the same rand can be zakatable or not depending on how it got into the fund. It also explains the edge cases that follow: extra voluntary contributions on top of a compulsory scheme, money left in a preservation fund by choice, and the two-pot savings component that members can now access once a year. Our zakat hub covers the general rules; this article is only about retirement money.
Compulsory employer pension and provident funds: no annual zakat
The Jamiatul Ulama KZN answered a member leaving a compulsory Momentum-administered pension fund after four and a half years. The ruling, checked and approved by Mufti Ebrahim Desai, states that there is no separate zakat on money in a mandatory pension fund, neither for the previous years nor upon receiving it. Instead, at the end of the member's zakat year, the withdrawn amount is added to other assets and zakat is calculated on the total. The growth on the contributions is also ruled halal to take, because the member had no control over the investments.
M S Omar reaches the same place and adds the tax detail: it is the net amount received after prescribed taxes that is added to zakatable assets, and zakat is paid on whatever remains unspent on the next valuation date. No zakat is payable for the preceding years. SANZAF's national chairperson, Fayruz Mohamed, confirmed the principle in a 2022 Salaamedia interview, with one qualification that matters: if you contribute more than the contractual minimum, the voluntary portion and its growth become zakatable every year, and you must ask the administrator for that portion's value annually.
Voluntary retirement annuities: zakat every year on the fund value
Mufti Mohammed Desai's ruling of 14 April 2022 at Fataawa.co.za is the clearest statement: if one voluntarily subscribes to a Shariah-compliant retirement annuity fund, the fund is zakatable, and on one's zakat date each year one should obtain the value from the company and pay 2.5% of it. SANZAF's chairperson described the same obligation on the fund's net realisable value, even though the member cannot access it before retirement. The practical consequence is a yearly bill that grows with the fund.
| RA value on your zakat date | Zakat at 2.5% | Monthly equivalent |
|---|---|---|
| R150,000 | R3,750 | R313 |
| R400,000 | R10,000 | R833 |
| R800,000 | R20,000 | R1,667 |
| R1,500,000 | R37,500 | R3,125 |
| R3,000,000 | R75,000 | R6,250 |
Two open questions are worth putting to your own scholar. The first is whether 'net realisable value' means the gross statement value or the value after the tax that SARS would take on withdrawal; the rulings we fetched do not define it, and a conservative reading uses the gross figure. The second is liquidity: an RA holder with R1.5 million locked away owes R37,500 and must find it from salary, which is why some savers direct part of the section 11F tax saving into a zakat reserve each year.
The dissenting view: nothing is due until payout
Not every South African Darul Ifta agrees. A June 2024 ruling from the Darul Ifta at ifta.mubz.co.za holds that one is not obligated to pay zakat on funds that have not come into one's complete ownership, and since both the pension fund and the retirement annuity in question could only be accessed on resignation or retirement, zakat falls due only once the fund pays out. The ruling cites the Hanafi classification of debts in al-Kasani's Bada'i al-Sana'i and treats the locked fund as a receivable rather than owned cash.
The difference is not academic. Under the majority view a R1 million RA costs R25,000 a year in zakat; under the dissenting view it costs nothing until retirement, when the payout joins your other assets. Our view is that you should follow one institution consistently and record the choice, rather than switching to whichever answer is cheaper in a given year. If you follow the dissenting view, the Darul Ifta's own note on receivables applies: zakat may be discharged voluntarily each year in advance, which avoids a large catch-up on payout.
Preservation funds, the one-third, and the two-pot savings pot
SANZAF's chairperson addressed what happens when you leave an employer: if you choose to leave money in a preservation fund rather than take it, you have made a voluntary decision to lock it in again, and that portion becomes zakatable every year at its net value. The compulsory logic no longer protects it because the choice was yours. Our guide to halal preservation funds covers the compliant options.
The two-pot system, in force since 1 September 2024, raises a question none of the rulings we fetched addresses directly. Sygnia's RA page confirms the mechanics: one withdrawal from the savings component per tax year, a minimum component balance of R2,000, tax at your marginal rate and a transaction fee of 2% excluding VAT between R100 and R600. For a voluntary RA the point is moot, since the whole fund is already zakatable under the majority view. For a compulsory employer fund, the savings component is now money you can call on within the year, which weakens the 'no control' basis for exemption. Ask your scholar whether the accessible savings component should be treated as owned cash; the two-pot guide for Muslims lays out the structure.
Living annuities after retirement
Once you retire and the lump sum is in your control, the exemption ends. M S Omar's fifth point is explicit: if the net proceeds are invested to provide a living annuity, the member must pay zakat each year on the capital value of that investment, and any unspent balance of the periodic drawdown is added to zakatable assets on the valuation date. A living annuity is, in zakat terms, simply an investment you own. The compliant products are covered in our article on Shariah living annuities.
Non-compliant funds: what you pay zakat on
Many South African Muslims are in employer funds with conventional portfolios. The compulsory ruling still applies while you are a member, so nothing is due annually. For a voluntary fund that is not Shariah-compliant, SANZAF's Showkat Mukadam gave a different base in the same Salaamedia interview: add up all the contributions you have made and pay zakat on that total, rather than on the market value, because the growth is tainted and must be dealt with separately. Fixing the underlying fund is the better answer, and our guide on fixing a haram employer pension from inside explains how.
Nisab and the numbers on 29 September 2026
SANZAF publishes a daily nisab on its home page. On 29 September 2026, corresponding to 25 Rabi al-Thani 1448, it showed the figures below, excluding VAT. Most South African institutions use the silver nisab for cash and investments because it brings more people into the obligation; at R19,955.47 it is well below a single year of RA contributions for most savers. Use the zakat calculator to combine your RA value with cash, shares and gold.
| Measure | SANZAF figure, 29 September 2026 |
|---|---|
| Silver nisab | R19,955.47 |
| Gold nisab | R193,599.72 |
| Silver price | R32.59 per gram (R923.85 per ounce) |
| Gold price | R2,213.07 per gram (R68,834.35 per ounce) |
How to do it in practice
- Fix a zakat date and use the same lunar date every year, since all the rulings value the fund on that date
- List every retirement fund you hold and classify each as compulsory employer fund, voluntary RA, preservation fund or living annuity
- Request a statement from each administrator as at your zakat date, and for a compulsory fund with extra contributions ask for the voluntary portion separately
- Add the zakatable balances to cash, shares, unit trusts and gold, subtract debts due within the year, and apply 2.5% if the total exceeds the silver nisab
- Pay through a channel that issues a receipt, and if you want the section 18A deduction choose one of the approved organisations in our guide to where to pay
- Record which institution's ruling you followed so that the method stays consistent as your funds grow
Our view
If you are a salaried employee in a compulsory fund and nothing else, you have no annual zakat on it; put the question away until you leave or retire, then add the net payout to your assets. If you hold a voluntary RA, follow the majority ruling and pay 2.5% of the statement value every year, and build the cash for it into your budget because the fund cannot pay it for you. If you top up a compulsory fund above the contractual rate, ask the administrator to split the voluntary portion so you can zakat it. If you have taken the dissenting view, pay annually anyway as a voluntary discharge; the Darul Ifta that holds that view permits it, and it spares you a large bill at retirement.
Where to pay is a separate decision, and our guide to where to pay zakat in South Africa compares the channels. Facts checked against sanzaf.org.za, jamiat.org.za, fataawa.co.za, msolaw.co.za, salaamedia.com, ifta.mubz.co.za, sygnia.co.za on 29 September 2026.
Frequently asked questions
Do I pay zakat on my retirement annuity every year?
Under the majority South African view, yes, if you subscribed voluntarily. Mufti Mohammed Desai's ruling at Fataawa.co.za says to obtain the fund value on your zakat date and pay 2.5% of it, and SANZAF's chairperson gives the same answer. A minority Darul Ifta view defers zakat until payout because the fund is not in your complete ownership.
Is zakat due on my employer's compulsory pension or provident fund?
No, not while you are a member and the contributions are a condition of employment. The Jamiatul Ulama KZN rules that there is no separate zakat on a mandatory pension fund, neither for past years nor on receipt. When the fund pays out, the net amount is added to your other assets and zakat is calculated on the total at your next zakat date.
What is the nisab in rand in October 2026?
SANZAF's home page on 29 September 2026 showed a silver nisab of R19,955.47 and a gold nisab of R193,599.72, based on silver at R32.59 per gram and gold at R2,213.07 per gram, excluding VAT. The figures change daily with metal prices and the rand, so check the current number on your own zakat date.
Does the two-pot savings pot change my zakat?
For a voluntary RA, no, because the whole fund is already zakatable annually under the majority view. For a compulsory employer fund, the savings component is now accessible once a tax year, which weakens the 'no control' reasoning behind the exemption. None of the rulings we fetched addresses this directly, so put the question to your own scholar.
Do I pay zakat on a living annuity?
Yes. Once the retirement proceeds are under your control and invested in a living annuity, M S Omar's analysis requires zakat each year on the capital value of the investment, plus zakat on any unspent drawdown remaining on your valuation date. The compulsory-fund exemption applies only while the money is locked in an employer scheme.
Compare providers in your state
See side-by-side comparisons of Shariah-compliant products, or let our matcher recommend the best options for your situation.
What if my retirement fund is not Shariah compliant?
If it is a compulsory employer fund, nothing is due annually regardless of its portfolio. If it is a voluntary fund with a non-compliant portfolio, SANZAF's Showkat Mukadam advises paying zakat on the sum of your contributions rather than the market value, since the growth is tainted and must be handled separately. Moving to a compliant portfolio resolves the problem at source.
