Using interest rate as a discount factor in calculations

Fatawa Question

I am an actuary by profession and engaged in calculating pension and carrying out valuation regarding pension funds. These actuarial valuations are used primarily to arrive at a sustainable contribution rate for the Pension fund. These pension funds are invested in whatever investments available in the market. The main assumption involved in these calculations is the discount factor or the interest assumption close to the rate of return on the investments. My question is although I do not engage into interest based transactions for myself but my work at times involves such calculations which are based on the interest assumptions and discount factors also at times I have to ascertain the market value of assets of the pension fund which again involves calculations based on interest. Sometimes I doubt that whatever I do is wrong according to Islam since I am an indirect witness of interest if that is the case then all pension earnings and all allowances from social security would also be Un-Islamic. Kindly comment and advise.

Fatwa

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Publication Date

2001-03-02

Main Subjects

Financial and Accounting Sciences
Religion
Islamic Studies

Topics

• Islamic jurisprudence
• Interest rates
• Discount

No. of Pages

1

Data Type

Fatawa

Language

English

Record ID

BIM-725612

• APA
• MLA
• AMA