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Islamic Finance

UK workers now have another Islamic pension product with Wahed Invest-Options tie-up

Wahed Invest has teamed up with Options UK to offer a Shariah-compliant workplace pension product for UK employees.

Launched at the beginning of September, the new pension option enables UK-based employees, via their employers, to invest in eight model portfolios which includes five third-party pension funds operated by the U.S.-based firm best known for its Islamic robo-advisor. These portfolios will include Wakalah funds (Treasury Deposits), Gold and the Islamic Global Equity Index as well Wahed’s lifestyle option. 

A workplace pension scheme is set up by organisations to provide their employees with retirement benefits. Since April 6 2019, the UK government stipulates that the total minimum contribution of a workplace pension is 8% (employer’s minimum contribution is 3% and an employee’s minimum contribution is 5%).

Simultaneously, Wahed also launched a halal self-invested personal pension (SIPP) product. The SIPP will invest in the same portfolios as Wahed’s General Investment Account.

Similar to a workplace pension, a SIPP consists of investments that the user has more direct control over.

Wahed began discussions with Options UK, a pension administrator and professional trustee company, around a year ago, according to Abul Fazal Uddin, Business Development Manager at Wahed Invest.

“Not only are we catering for the individuals who know where they wish to invest but more importantly, we are now offering a fully-managed service to the majority who do not have the time, knowledge or inclination to make their own investment decisions,” said Uddin.

Under the structure, Options will act as authorised pension administrator. Wahed will be the investment manager and WealthKernel is the custodian for the pension.

U.S.-headquartered Wahed obtained permissions in late January from the UK regulator, the Financial Conduct Authority (FCA), to act as a Discretionary Fund Manager. In May, the company told Salaam Gateway it is planning a mobile app for the UK as part of its Islamic robo-advisory platform.


Whilst there are many millions of UK employees on workplace pensions from their employers, the vast majority of them are non-Shariah compliant or contain non-Islamic portfolios or investments.

There are not a lot of SIPPs for individuals or pensions offered at many companies that enable individuals to respect their faith and culture, according to Christine Hallett, founder and CEO of Options UK.

“We are looking to help offer a pension alternative to ensure people meet the requirements/criteria of the faith,” said Hallett. “We identified continued lack of focus in the marketplace and a real need for a diversified approach.”

However, there are a small number of Shariah-compliant schemes to choose from mainstream providers like Scottish Widows, Aviva and Nest.

Despite these offerings, Abul Fazal Uddin argues that Wahed’s mandate is broader.

He explained that existing providers like Legal & General, Hargreaves Lansdown and Fidelity, which offer Islamic workplace pension plans/schemes, have limited options like Nest that invests in the HSBC Islamic Global Equity Index Fund.

“Until now, the majority of providers offer only one fund as their Shariah option, which is fine if you are in the early stages of your career with some 30-40 years until retirement but not for those in their 40s to 60s bracket who do not have the luxury of time on their side any longer,” he said.

“The HSBC fund is a great fund and it is one of the five funds that we use. Instead of having exposure to approximately 100 lines of stock, you will have access to closer 400 lines of stock through our model portfolios,” he said. “We cater for various age ranges who have different investment risk profiles.”

One of the reasons for the lack of pension providers offering halal alternatives is cost involved and the commercial viability.

“Some of the challenges for offering halal workplace pension schemes are the fees to access halal funds as well as the limited breadth of choice makes it hard to justify commercially and is usually the main reason why many have not done more in this segment,” said Uddin.

“As a result, many providers don’t offer Shariah-compliant services. For us, we decided to work with Options UK as we wanted to serve Muslims or those looking for a halal and ethical alternative.”


A key part of Wahed’s efforts and success in attracting employees to sign up will be approaching prospective companies.

So far ten companies are currently onboarding, according to Uddin, adding that more are likely to join over the next few weeks.

“We will be approaching different companies initially who have a demand for a scheme such as ours, and targeting larger firms like Ikea, Tesco in the longer term,” he said. “We will have to educate employers because a lot of them don’t understand Shariah-compliant products.”

Part of this outreach will be raising awareness of prospective companies and organisations with Muslim employees or those seeking ethical pension alternatives.

“We’re happy to support companies that are continually looking for core problems that need to be solved, such as the ability to provide HWPs to those that need them,” said Karan Shanmugarajah, CEO of WealthKernel.

“Businesses work incredibly hard to ensure that all of their employees are catered for. Our partnership with Options UK and Wahed will help to provide Shariah-compatible retirement products following increasing demand from the British Muslim community.”

In addition to educating prospective employers, improving the financial literacy of British Muslim communities will be key.

“There needs to be education in the community about finance and pensions. Even the basics of what a pension is, the tax benefits and so on,” said Uddin. “We do this through regular education webinars and face-to-face presentations called Tea with Wahed.”

(Reporting by Hassann Jivraj; Editing by Emmy Abdul Alim

*Correction: A correction was made in Para 2. There are eight model portfolios and not eight funds, and we updated that line to also include "five third-party pension funds".

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