As Mr. Ronnie has pointed out that ‘By its very connotation, riba is an accrual on a loan at a predetermined rate.’ In India, some amount of our salaries is invested into Employee Provident Fund, necessarily without the approval of the employee. This amout is given back to the employee at the time of retirement or in parts after completing 5 years of service with some interest as fixed by the government. My question is that since we did not give it as a loan to anyone and neither asked for the interest, does the amount which we receive after the completion of said period, as interest account for Riba?
In principle, any interest accrued would be forbidden. However, there are elements to consider. First, inflationary adjustments should be taken into account as it is the right of the person receiving the deferred payment. Second, for all the prohibitions of the Shari`ah, a common rule of exception is that if the person in question is under compelling circumstances, he may benefit from the normally prohibited thing to the extent that he himself feels is necessary. Thus, this is where Islam lays the responsibility upon the adherent to decide if there are extenuating circumstances that would allow him to apply the exception. In other words, if these are the only means by which a person can live his retired years with dignity, security and health then he should know that God is merciful and grants respite when we are faced with insurmountable life challenges.
Islam is not merely a set of dos and don’ts that we have no role in; in fact, that is the excellence of a religion that continuously engages its adherents to cultivate their souls and elevate their minds. It is for this that Islam places a heavy burden upon the individual: to use its principles as a foundation in their everyday affairs.
I hope this helps.
God knows best.