As-salaamuAlaikum. Please help clarify as there is much confusion. I voluntarily contribute to my retirement fund, my employer has a small match of 3%. I have no access to this money unless I stop working there, become 59 1/2 yrs old, or become disabled. Therefore it's not accessible. Theoritically, if I have 50k now, and my amount increases by 5 k yearly, therefore 100k in ten years. If I pay zakat yearly on this money, I would have paid a total of $20,625 ($1250 + $1375 + $1500 + ..) after 10 years, and if I'm of retirement age and I finally take out the money total of $100,000 I would have paid $20,625/$100,000 which is almost 20% (not 2.5%), plus taxes. Please assist and clarify. Makes more sense to pay once after funds withdrawn!

AAWW

For any pension plan or the like, you need to pay Zakah annually on the withdrawable amount after deducting all prescribed penalty and taxes and administrative fees. Please notice that you do have a limited access to the money under regular or humanitarian reasons. When choosing to withdraw, you will be charged different charges, like penalty and the like.

The above does not mean that you have to withdraw the money, rather you do the theoretical calculation to figure out the Zakah you owe Allah SWT.

Based on this approach, you do not pay more than 2.5% annually and on a part of the money than you can withdraw.