Pension provider Smart Pension and Islamic digital investment platform Wahed have launched a new fully diversified workplace pension, the Halal Workplace Pension.

The pension offering seeks to address the “unmet need” for modern Shariah-compliant pensions amongst Muslim employers and employees in the UK.

Smart said that the scheme was the first of its kind from a major defined contribution (DC) master trust.

The Halal Workplace Pension adheres to Shariah principles and offers a managed investment glidepath as its default investment option.

Smart noted that existing Shariah-compliant pension offerings from large master trusts were single equity funds that need to be actively selected by members and do not feature risk management in the run-up to retirement, unlike non-Shariah-compliant default funds.

In 2021, the Office for National Statistics (ONS) revealed that 84.5 per cent of Muslims in the UK were 50 or under, compared to 62 per cent of the overall population.

However, a third of Muslim employees do not have a workplace pension, with 78 per cent citing concerns around Shariah compliance, according to a study by Islamic Finance Guru.

The Halal Workplace Pension brings together the Smart Pension Master Trust, underpinned by Keystone, with Wahed’s Shariah-compliant investment capabilities.

“This new pension scheme sets a new standard for financial wellbeing and pension provision among the UK’s Muslim population,” Smart Pension chief investment officer, Paul Bucksey, stated.

“British Muslim employers and employees have been missing out on a fair investing landscape for too long, with little choice when it comes to investing their pension. This has left many Muslims in the UK feeling disconnected from financial services as well as their pensions.

“We hope the industry follows our lead, and trustees and pension schemes consider how they can provide greater diversity and inclusion across their schemes.”

Wahed head of UK, Syed Ahmed, added: “Wahed’s mission of financial inclusion through accessible and faith-based investing is further strengthened through our collaboration with Smart Pension, one of the UK’s leading workplace pension providers.

“This pioneering pension scheme ensures equitable opportunities for Muslims, adhering to Shariah principles. It represents a significant step towards levelling the pensions landscape and nurturing financial empowerment.”

---