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NEWS & INSIGHTS

Addressing the unmet need for modern Shariah-compliant pensions amongst Muslim employers and the UK’s 3.9 million Muslim population

British Muslims more likely to be of working age, but face greater barriers to accessing pension schemes.

First major DC master trust to offer fully diversified, halal workplace pension at scale.

It is an employer’s responsibility to ensure that diversity, inclusivity and equal opportunities are carried out in the workplace, this is also true for payroll and pensions. Currently, not all Master Trust providers are able to offer a Shariah compliant investment portfolio, putting the Muslim workforce at a disadvantage when it comes to making financial preparations for later life.

Smart Pension, one of the UK’s leading workplace pension providers, and Wahed, the leading Islamic digital investment platform, have launched a new fully diversified workplace pension, the Halal Workplace Pension. The collaboration meets the unmet demand for modern, Shariah-compliant workplace pensions from Muslim employers and among the UK’s 3.9 million-strong Muslim population.

The Halal Workplace Pension is the first of its kind from a major DC master trust. The new offering adheres to Shariah principles and offers a managed investment glidepath as the default investment option. Existing Shariah-compliant pension offerings from large master trusts are single equity funds that members have to actively select, and feature no risk management in the run-up to retirement age, unlike non Shariah-compliant default funds.

The Muslim population has the youngest age profile of any faith group in the UK, with an average age of 27, significantly younger than the UK’s general population. In 2021 the Office for National Statistics found that 84.5% of Muslims in the UK were 50 or under, compared to 62% of the overall population. However, one third of Muslim employees don’t have a workplace pension, with 78% citing concerns around Shariah compliance.

The Halal Workplace Pension brings together the Smart Pension Master Trust, underpinned by Keystone, Smart’s award-winning digital-first technology platform, with Wahed’s market-leading Shariah-compliant investment capabilities.

The Halal Workplace Pension is available to employers who want to only offer Shariah-compliant workplace pension investment options to their employees. The investment option will be available across the UK to all of Smart Pension’s 1.4 million members later in the year.

The Halal Workplace Pension can assist employers who seek to enhance the long-term financial security of their Muslim colleagues. It levels the playing field, offering the same benefits that non-Shariah invested colleagues enjoy, alongside the first-class technology they would expect from an ecommerce app or digital bank.

Paul Bucksey, Chief Investment Officer of Smart Pension said,
“This new pension scheme sets a new standard for financial wellbeing and pension provision among the UK’s Muslim population. Combining Wahed’s unrivalled reputation for Shariah-compliant investing with Smart Pension’s scale, industry-leading technology and customer experience, we will deliver a very exciting prospect for the UK’s Muslim population and employers and help level the pensions playing field.
“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.”

Syed Ahmed, Head of UK of Wahed said,
“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”.

Shabna Islam, Head of DC Provider Relations at Hymans Robertson said,
“Smart Pension and Wahed have taken this crucial step in the right direction – improving diversity, equity and inclusion in the Defined Contribution workplace pensions market. By offering a Shariah-compliant managed investment option they are breaking barriers in the access to pensions for the Muslim community.

“As an independent third-party evaluator of the defined contribution master trust market and a British Muslim, it’s been very sad to see how the Muslim community has been handicapped through a lack of choice on pension scheme investment options. I’m excited about where this journey will take Smart Pension and hope that other providers will take note. It’s about time we helped those who are less engaged with pensions to trust pension providers. Offering better options that align with savers’ beliefs will improve their outcomes.”

About Smart Pension
Launched in 2015, Smart Pension exceeds £5bn in assets under management (AUM) and now serves over one million members and more than 70,000 employers. It is powered by Keystone, Smart’s global savings and investments technology platform.

Aquiline Capital Partners, Barclays, Chrysalis Investments, DWS Group, Fidelity International Strategic Ventures, J.P. Morgan, Legal & General Investment Management, Link Group and Natixis Investment Managers are all investors in Smart Pension.

AndIf you would like to understand more about your current pension plan’s investment inclusivity, or would like to improve the diversity of investment options for your contractors, please contact Naomi at FCSA@smartpension.co.uk or 0203 053 4430