Question # 405: Is pension and gratuity money received in life of person subject to inheritance at time of death or it is only for the widow.
bismi-llahi r-raḥmani r-raḥīm,
Assalamu ‘laikum warahmatullahi wabarakatuh,
All praise and thanks are due to Allah (سبحانه و تعالى), and peace and blessings be upon His Messenger (صلى الله عليه و سلم).
First of all, we implore Allah (سبحانه و تعالى) to help us serve His cause and render our work for His sake.
Shorter Answer: There is no doubt that the possessions of a person on his death, which he owned when he was alive should be distributed among his heirs according to the Islamic Inheritance Law. Hence, all the money received as a result of pension/gratuity during his lifetime formed part of his estate. However, if any money is gifted, upon his death, from his work to his family, then that should be given only to the persons specified by his work.
Long Answer: Pension can be explained as a fixed amount, other than wages, paid at regular intervals to a person or to the person’s surviving dependents in consideration of past services, age, merit, poverty, injury or loss sustained, etc.
There is no doubt that the possessions of the dead which he owned when he was alive should be distributed on his heirs according to Islamic Law. …The retirement pension (gratuity)…, [is] the money that the dead deserved from his work, like monetary deductions, then this is a part of the inheritance and it should be distributed among the heirs. However, if any of this money is a gift from his work to his family, then they should be given to the persons specified by his work.
[Next,] if the money of the [Pension] fund is invested in forbidden fields, like investing it in Riba (interest and usury) based banks and commercial insurance companies and other Islamically forbidden fields, then one should get rid of the interests and other forbidden profits by spending it in the general welfare of the Muslims, and the heirs are only entitled to the capital money and the profits from lawful transactions. (Islamweb.net, a web site belonging to the Ministry of Awqaf and Islamic Affairs in the State of Qatar)
In al-Mawsoo‘ah al-Fiqhiyyah it says: “The Shafi‘is clearly stated that also to be included in the estate is anything that is added to the property of the deceased after his death as a result of something that he did during his lifetime, such as game that fell into a trap that he set up whilst he was alive, because his setting up of the trap to catch the game is the cause of it coming into his possession, or he died and left behind wine that turned into vinegar after his death.” (Islam Q&A)
Allahu A’lam (Allah (سبحانه و تعالى) knows best) and all Perfections belong to Allah, and all mistakes belong to me alone. May Allah (سبحانه و تعالى) forgive me, Ameen.