HSBC launches Islamic pension fund

A pension fund designed to meet the requirements of Islamic law, or Shariah, was launched yesterday by HSBC.

Islamic law restricts the payment and receipt of interest, which prevents some Muslims from investing in equities, including pension funds that contain them, and while shares and dividends are acceptable under Islamic law, speculation is not.

Furthermore, investments in companies that derive income from activities related to alcohol, pork-related products, conventional financial services, pornography and nudity, gambling, tobacco, armaments and genetic experimentation are forbidden under Shariah.

The HSBC Life Amanah pension fund tracks an index containing 100 companies that are engaged in Shariah-compliant business.

Javed Ahmad, director of HSBC Amanah finance, the group's Islamic financial services division, said: "Investing in a pension is a vital part of sensible financial planning, but the special needs of British Muslims have been largely overlooked, until now, by the UK financial services industry.

"Now the HSBC Life Amanah pension fund will allow Muslims to invest in a pension without compromising their religious beliefs."

The pension fund has been approved by an independent supervisory committee of Islamic scholars. It is not available to individuals, but companies providing employee pension schemes can choose to offer it as part of a range of pension funds.