Halal Pension in the UK: The £13 Billion Wake-Up Call British Muslims Can No Longer Ignore

Ask most working Muslims in Britain whether they have a halal pension, and you will get one of three answers: no, I'm not sure, or I didn't know that was even possible. Each of those answers points to the same underlying crisis — and the numbers behind it are stark.

Retirement planning sits at an uncomfortable intersection for many British Muslims. Conventional pensions invest in interest-bearing bonds and companies involved in industries prohibited by Islamic law. For a community that takes its faith seriously, that is not a minor concern — it is a dealbreaker. And so, quietly and consistently, Muslims across the UK have been opting out. Not out of laziness. Out of conscience. The tragedy is that halal pension options in the UK now exist, are regulated, and in some cases outperform their conventional equivalents — yet the vast majority of British Muslims have never heard of them.

The Scale of the Problem

Research by digital pension provider Penfold identified approximately 206,720 working British Muslims with no pension of any kind — not a small pot, not an underfunded one, none at all. Collectively, that represents a retirement savings deficit of over £11.5 billion. When Islamic Finance Guru extended that analysis across a generation of working-age Muslims, the figure grows beyond £13 billion. These are not abstract numbers. They represent real families facing real hardship in old age.

According to the 2021 Census, there are approximately 3.9 million Muslims in England and Wales — 6.5% of the population. Some 61% of the UK Muslim population is under the age of 35. This is a young, growing, economically active community. And it is the community most at risk of arriving at retirement with nothing to show for decades of work.

A Participation Problem the Data Confirms

The UK government's Workplace Pension Participation statistics (DWP, 2024) show an overall workplace pension participation rate of 80% across all employees. For Pakistani and Bangladeshi employees — the two largest Muslim ethnic groups — that figure drops to just 73%. In a system where opting out requires a deliberate action, a 7-point gap does not happen by accident.

Research published by the Institute for Fiscal Studies in early 2025 makes the mechanism explicit: when economists controlled for religion, the participation gap for Pakistani employees was almost entirely eliminated. It is not ethnicity or income driving Muslim workers out of pensions — it is faith.

That third figure — 80% of UK Muslims without a pension saying they did not know that halal pension options existed in the UK — may be the most revealing of all. This is not a crisis of willingness. It is a crisis of awareness and access.

"The pensions industry is sitting on a ticking time bomb, threatening the financial wellbeing of hundreds of thousands of people. The failure to provide pension options that suit the needs of today's saver is not only unjust — it's a reckless mistake."

— Pete Hykin, Co-founder, Penfold

What Islam Actually Says About Retirement Planning

There is a common misconception that tawakkul (trust in Allah) means one should not concern oneself with financial planning. This is a misreading of Islamic teaching. The Prophet Muhammad ﷺ said: "Tie your camel, then put your trust in Allah." (Al-Tirmidhi). Tawakkul means trusting Allah after you have taken the means available to you. A halal retirement plan for UK Muslims is not a compromise of faith — it is an expression of it.

The Quran is equally clear: "And let those fear who, if they left behind weak offspring, would fear for them. Let them be conscious of Allah and speak words of appropriate justice." (Quran 4:9). Providing for one's family is not merely permitted — it is an obligation.

Halal Pension Providers Available in the UK Today

The Employer Contribution You May Be Leaving Behind

Under UK auto-enrolment rules, employers must contribute at least 3% on top of your own contributions. When a Muslim employee opts out entirely, they forfeit that employer money and government tax relief — both added to the pot at no extra cost. Over a working lifetime, this runs into tens of thousands of pounds.

What You Can Do Today

1. 01
   Ask your employer about halal pension options.

   Many large schemes including NEST, Aviva, and Smart Pension already offer Shariah-compliant funds. A direct request is often all it takes.
2. 02
   Check your current fund if already enrolled.

   Auto-enrolment puts you in the default fund, which is almost never Shariah-compliant. Switching within the same scheme usually takes one form.
3. 03
   Use a halal pension calculator.

   Model your own contributions, growth scenarios, and projected retirement pot using a Shariah pension calculator built on Islamic finance principles.
4. 04
   If self-employed, explore a halal SIPP.

   Several UK providers offer SIPPs with full Shariah-screened portfolio customisation.
5. 05
   Speak to an Islamic finance adviser.

   Certified advisers in the UK specialise in Shariah-compliant financial planning and can structure a full halal retirement plan for you.

A Community at a Crossroads

Britain's Muslim community is young, growing, and economically active. The financial decisions — or non-decisions — made in the next decade will define the retirement security of an entire generation. Islam has always placed a premium on preparation, prudence, and protecting those in one's care from avoidable hardship. A halal pension is not at odds with those values — it is the practical expression of them.

The £13 billion gap is not destiny. It is a choice. And — for those who start today — it is still one that can be made differently.