If a Musi contributes monthly toward a pension, is Chanda payable on that pension upon retirement?

Yes, Hissa Amad is payable on pension income. Although a portion of the pension may represent contributions previously made by the individual after paying Hissa Amad, those contributions generally constitute only a small fraction of the total pension received.

The treatment of a 401(k) retirement plan is different. Employee contributions to a 401(k) are deducted directly from salary before it is received. Therefore, when income is drawn from 401(k) savings upon retirement, Hissa Amad is payable on the full amount drawn each month.