Some Australian Muslims say they have no intention of ever using their superannuation funds, as they rely on investments that don't fit with their religious beliefs. And with nearly half a million Muslims living in Australia, that's a market the growing Islamic superannuation sector is keen to tap into.
There are a few companies now offering Islamic superannuation in Australia. They call themselves “ethical” as they avoid products considered harmful, such as alcohol, weapons, pornography and tobacco, or companies that use child labour for example.
But what makes them different from other so-called “ethical” super funds is they also avoid products Muslims believe are “kharam” or banned under Islam, such as pig products.
Melbourne Naturopath Julide Turker said before Islamic superannuation became available in Australia, she had no intention of using her employer contributions. She said she would consider donating it to charity instead. She admitted this may appear strange to non-Muslims.
"I know people look at that and laugh and say how can you not do anything with your super, over 40 or 50 years of work," she said. "But if it doesn't agree with me on a spiritual level then I'm not fussed if I make use of the funds or not, knowing that they are not halal funds anyway."
Ms Turker has now transferred her super to an Islamic fund.
Crescent Wealth recently became the first Islamic super fund to be listed with the banking regulator, APRA.
It claims to adhere to Islamic investment principles as set by the global Islamic finance regulator – the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOFI).
It also works with a Shariah Supervisory Board, made up of international scholars on Islamic finance, who specifywhich investments fit with the Muslim religious framework.
"They ask, 'Is it Halal?', he said. "'Is it okay to give the money to the superannuation companies?'"
Crescent Wealth’s Director of Strategy and Development, Omar Khan, said when his company started offering Shariah-compliant super more than a year ago; there was significant disengagement with superannuation within the Muslim community.
"What we've found is that as they join our super fund, they're engaging with the process," he said. "They want to seek our advice now, they want to plan for their retirement because they see this as a pool of money that can actually benefit them, not something they are forced into."
He said Islamic super also stipulates avoiding investments that involve interest or high levels of debt. "Islam encourages trade, Islam encourages investments but what kind of investments and what kind of trade, that's the important thing." Sheikh Abdel Aziem from Melbourne's Al-Taqwa mosque says his followers ask lots of questions about how Islam relates to financial matters. "They ask, 'Is it Halal?', he said. "'Is it okay to give the money to the superannuation companies?'"
Mr Khan said Islamic investment instead focuses on products and services that benefit the community. "We tend to focus on companies that are in the healthcare sector or technology sector, so as an example, CSL in Australia is something that is halal," he said. "In the US we invest in companies that produce organic foods."
Others include Malaysian healthcare group IHH Healthcare Bhd, internet portal Onthehouse Holdings and communications group -Telekomunikasi Indonesia.
Crescent Wealth estimates Muslim Australians have up to $12-billion invested in super funds. And while that figure makes up only a fraction of Australia's $1.8-trillion superannuation assets, it believes interest in financial products in line with Sharia principles is growing.
Omar Khan said his company gains about 40 new members per week, and has 2000 members since launching more than a year ago. "There's obviously those from the Australian Islamic community that are religiously devout and it's important for them to follow their faith," Mr Khan said. "But also people from broader Australia that see this as a socially-responsible, or ethical, investment option for themselves."
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