A Case for Shari’ah Compliant Pension Fund Administration in Nigeria

Abstract

According to Islamic teachings, dealing in interest-related activities and investing in harmful or unproductive sectors is prohibited. Nigerian Muslim employees under the contributory pension scheme are indirectly involved in such activities due to the nature of pension fund investments. This study explores the case for establishing a Shari’ah-compliant pension fund administration in Nigeria using a survey design. Data were collected from 150 respondents, with 120 valid responses analyzed using descriptive statistics and regression analysis. The findings reveal that Muslim workers participate in the conventional scheme mainly out of necessity and would likely opt for a Shari’ah-compliant alternative if available. However, several operational, regulatory, and awareness-related challenges hinder its establishment. The study recommends collective efforts toward developing Shari’ah-compliant pension structures in Nigeria.