A note to the reader: In this article, I will be using the term “401(k)” for the sake of simplicity. This article will also apply to you if your employer offers you a 403(b) or a 457 plan. The terms and conditions of these types of accounts are very similar.
Hi! I’m looking for authentic information regarding employer matching on shares bought by an employee. Is that Halal and can the profit earned through that be kept by an employee or should it be donated if that’s haram?
Thank you for your reply. However, the article doesn’t exactly answer my question.
I’m wondering if, let’s say we assume this company deals with all its investments in a Halal manner, is share matching by definition a Halal concept? To me, it sounded like it might not be Halal because the return is somewhat fixed (for example: if I invest 500 USD, I can be sure I’d get at least 1000 USD out of the investment, disregarding how the value of the shares change over time). I understand from my research that fixed deposit funds, for example, are not Halal. So I drew a parallel here with share matching - am I correct in drawing this parallel?
I understand the aspect of evaluating if the company’s dealings are Halal or not and if not, in that case I understand that I will for sure need to purify my investment. But is share matching by definition Halal?
And similarly, what about when companies offer share options that can be cashed over a 3 or 5 year period after an employee signs the contract and starts working for them? Is it permissible in Islam for me, as an employee, to partake in? @Frhaann
If I may, to answer your first question, share matching from employers is Halal through a retirement scheme (so long as the investments themselves are Halal). The employer match is a perk or benefit offered by the employer as opposed to a direct return on the investment that you as an employee put in (so not the same as a fixed deposit, where your money is invested and you get a fixed interest rate return).