A British firm has launched a Sharia-compliant pension fund that will enable Muslims to save for retirement in compliance with Islamic principles.
The British government will begin offering Muslim workers Sharia-compliant pensions as of 2012. The launching of the funds, which are said to be structured around a strict code of ethics and based on the Muslim Koran and Islamic Sharia law (a religious code for living), reflects the gradual establishment of parallel Islamic financial and legal systems in British public life.
Pointon York, an independent financial services company based in Leicestershire in central England, announced on June 6 that it will begin offering four Sharia-compliant Self-Invested Personal Pensions (SIPP) products that do not bear interest nor invest in companies that trade in alcohol, gambling, pornography, tobacco or weapons, in conformity with Islamic law.
Pointon York is the first specialist SIPP provider to receive Sharia-compliant accreditation by the Islamic Bank of Britain (IBB), which has pioneered Islamic retail banking in the United Kingdom. The IBB will supervise the entire lifecycle of Pointon York's pension funds to ensure full compliance with Sharia legal principles.
In 2012, the British government will begin offering Muslim workers a Sharia-compliant pension fund in the public sector. A new government agency, the National Employment Savings Trust (NEST), will give Muslims who do not already have a company pension the option of investing in the HSBC Life Amanah Pension Fund, a Sharia-compliant pension scheme.
NEST initiated the procurement process for a Sharia-complaint global equity fund in January 2011, by means of a tender which generated proposals from funds across Europe. In April, NEST announced that it had appointed HSBC, a huge global banking and financial services company headquartered in London, to run the Islamic portfolio. The initial target market comprises some 200,000 Muslims in Britain.
Muslim families in Britain can already acquire Sharia-compliant baby bonds under the British government's Child Trust Fund scheme. In 2008, Britain's Financial Services Authority (FSA) authorized the establishment of the country's first Islamic insurance company as well as the country's first Sharia MasterCard, called the Cordoba Gold MasterCard.
The new financial products are seeking to fill the growing demand for Sharia-compliant financial products in Britain in the wake of Muslim mass immigration to the country.
The United Kingdom is home to an estimated 2.8 million Muslims, which is equivalent to about 4.6 percent of the overall population. In absolute terms, Britain has the third largest Muslim community in Europe, after Germany (4.1 million, 5.0 percent) and France (3.6 million, 5.7 percent.) According to a recent survey conducted by the Washington, D.C.-based Pew Research Center, the Muslim population in Britain is forecasted to nearly double to 5.5 million within the next 20 years.
Little surprise, then, that Islamic banking is growing faster in Britain than it is in many Islamic countries in the Middle East and Asia. According to the "Global Islamic Finance Report 2011," Britain has emerged as ground zero for Islamic banking in Europe; and London is now the main center for Islamic finance outside the Muslim world.
With $19 billion in reported Islamic banking assets, Britain's Islamic finance sector ranks number one in Europe, and number nine in the world. It dwarfs those sectors of some states where Islam is the main religion, including Pakistan, Bangladesh, Turkey and Egypt, according to a new report titled "The City UK Islamic Finance 2011."
More than 20 banks in Britain now offer Islamic finance products and there are five fully Islamic banks in the country. In addition, there are 55 colleges and professional institutions offering education in Islamic finance in Britain – more than anywhere else in the world.
The establishment of Britain as a global center for Islamic finance is being promoted by the British government, which has extended tax relief on Sharia-compliant mortgages to companies and has eased the trade in Islamic bonds known as Sukuk. There were five Sukuk listings at the London Stock Exchange (LSE) in 2010 and one in early 2011, bringing the aggregate total at the LSE to 31 listings worth nearly $20 billion.
The growth of Islamic finance comes as other aspects of Sharia law are becoming enshrined in the British legal system. At least 85 Islamic Sharia courts are now operating in the country, almost 20 times as many as previously believed. A recent study by the London-based Civitas think tank titled "Sharia Law or 'One Law for All'?" found that scores of unofficial tribunals and councils regularly apply Islamic law to resolve domestic, marital and business disputes, many operating in mosques. It warns of a "creeping" acceptance of Sharia principles in British law.
The study follows outcry over remarks by the Archbishop of Canterbury, Dr Rowan Williams, who has argued that adopting parts of Islamic Sharia law would help maintain social cohesion in Britain. He also said: Sharia law in Britain is "unavoidable."
Somewhat belated efforts are now being made to push back against the spread of Sharia in Britain. Under a new bill introduced in the House of Lords, the lower chamber of the British Parliament, on June 7, Islamic courts would be forced to acknowledge the primacy of English law.
The Arbitration and Mediation Services (Equality) Bill would make it an offense punishable by five years in jail for anyone falsely claiming or implying that Sharia courts or councils have legal jurisdiction over family or criminal law. The bill, which would apply to all arbitration tribunals if passed, aims to tackle discrimination, which its supporters say is inherent in the courts, by banning the Sharia practice of giving woman's testimony only half the weight of men's.
The bill, proposed by Lady Caroline Cox-Johnson, and backed by women's rights groups and the National Secular Society, was drawn up because of "deep concerns" that Muslim women are suffering discrimination within closed Sharia law councils. Cox said she had found "considerable evidence" of women, some of whom are brought to Britain speaking little English and kept ignorant of their legal rights, suffering domestic violence or unequal access to divorce, due to discriminatory decisions made. "We cannot continue to condone this situation. Many women say: 'We came to this country to escape these practices only to find the situation is worse here.'"
The bill challenging Sharia law will be viewed as a declaration of war by many Muslims who view the institutionalization of Islamic law as a key component of their political strategy of Islamifying the West. In the words of Imam Abdullah al-Hasan of the East London Mosque: "Islam is here to stay in Britain."
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