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Last Updated: Tuesday, 13 April, 2004, 10:23 GMT 11:23 UK
HSBC offers Islamic pension fund
Wine
The fund will steer clear of companies producing alcohol
HSBC is launching an Islamic law-compliant pension fund targeted at the UK's two million Muslims.

The HSBC Life Amanah Pension Fund will hold shares in companies that comply with the Sharia, or Islamic law.

Individuals cannot invest in the fund directly - they must sign up through an employee scheme.

Companies whose main business involves alcohol, gambling, pornography, pork products, financial services or tobacco will be excluded.

Given to charity

At present, strict observance of Islamic law could prevent Muslims from investing in company pension schemes.

Trustees need to consider whether they are giving Muslim employees and members access to a Sharia-compliant pension
Julian Lyne, HSBC
HSBC's fund will be overseen by Islamic scholars.

Any dividends that are generated by unacceptable business practices, for example part of an advertising agency's profits, that come from alcohol advertising, will be "purified".

And these non-Sharia-compliant profits will be given to charity rather than distributing them to investors through the HSBC Community Foundation.

Julian Lyne, head of institutional pooled funds at HSBC Asset Management in the UK, said: "With the recent anti-discrimination legislation, trustees need to consider whether they are giving Muslim employees and members access to a Sharia-compliant pension fund."

Forbidden

Under Islamic law, Muslims are forbidden from investing in any companies involved with alcohol, arms, tobacco, pork and gambling.

They are also prevented from investing in big banks as these make profits from charging interest on loans. And under Islamic law the receipt and payment of interest is forbidden.

There has been growing awareness of the potential market in supplying tailored financial services for Britain's Muslim community.

HSBC already offers an Islamic law-compliant home loan and stockbroking services for British Muslims.




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