One of the key individual obligations Islam mandates on people is to ensure that their wealth is built through legitimate sources. One’s sources of income and wealth must be Halal (permissible), and haram (forbidden) sources of income/wealth are a serious taint on a person’s standing before Allah.
Superannuation is an important source of wealth increase for individuals living in Australia. Mandated by the Australian government, employees must have a super component to their salaries which is invested to increase their retirement savings. This is invested via superannuation funds in equities, debt and other investment vehicles to result in a significant payout to individuals when they retire.
For superannuation to be “Islamic super” means it is in line with the principles of Islamic investments and thus Halal. But what does this in turn mean?
The yardsticks of judging whether one’s wealth is Halal
When it comes to wealth and income, what one earns (whether through work or investments) Islamic law dictates that it be from Islamically legitimate sources. It must, therefore, avoid prohibitions that Islamic law places on activities Muslims can partake in and benefit from.
These activities include the likes of alcohol, pork, weapons manufacturing, and – all importantly – interest (riba).
The prohibition of interest/riba is central to Islamic finance. You cannot use the money to make more money, there must be an underlying asset or production of some sort to produce an increase in wealth. Investments must, therefore, be based on assets and therefore eliminating the opportunity of economic injustice that can exist in trade or business.
Thus, when it comes to investments and wealth being Halal, the yardstick of judgement is what results in the increase of one’s wealth. Is the target one is investing into an activity or asset that Islam allows? If not, the resulting increase in wealth is deemed forbidden
The choices we can make to make our super Halal
As mentioned earlier, the entire point of super is to realise an increase in one’s wealth through careful investment into various types of assets and instruments.
For a long time, Muslims in Australia had few choices if they wanted to make their super investment choices shariah-compliant.
With the advent of Crescent Wealth, however, they have a real choice. As well as applying qualitative screening to potential investments, our Islamic investment methodology sees us undertake a quantitative screening before any investments are made.
We look at organisations’ financials and avoid investments in organisations that are highly leveraged (presenting a higher risk of loss), or that are “cashed-up”, thus hindering economic activity.
How Crescent Wealth undertakes halal investments in Australia and abroad
Crescent Wealth’s investments are guided by the Accounting and Auditing Organisation of Financial Investments (AAOFI) standards, the worldwide benchmark in shariah-compliant investment guidelines and protocols. These standards consolidate rulings relating to Islamic investment and provide a guide which is used globally.
Our investment in both Australian and overseas investment destinations is guided by the AAOFI standards.
Islamic Finance is a rapidly growing market, currently worth a combined US$2.4 trillion in assets. Crescent Wealth is doing its part to grow this sector and give its members an Islamic investment option. By investing through Crescent Wealth, then, Muslims in Australia finally have an option when it comes to ensuring their investments – and wealth – remains halal.
If you are interested in switching to a super fund that displays your Islamic values and ethical standards, switching is super easy or call us on 1300 926 626.
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Talal currently serves as a Non-Executive Director on the Whitlam Institute and Western Sydney University Foundation Council Board. He also serves as Chairman of First Quay Capital and Chairman of the Australian Arab Dialogue. Talal has also served on the Australia Post, Board of Sydney Ports, Macquarie University and the Western Sydney Area Health Service and the Chairman of the Department of Foreign Affairs and Trade; Council of Australia Arab Relations. In an executive capacity, Talal spent 10 years at PwC as a director and strategist, and at investment firm Babcock & Brown in the Corporate Finance Group and later in the Technical Real Estate Division. Later Talal held leadership positions in Better Place Australia, Platinum Hearing and Star Transport Australia.