Pensions Feel Boring Until You Realise They Could Be Your Future Salary

Many people think of pensions as something distant, complicated, or simply uninteresting. This feeling is especially common among younger savers, who may not yet see the relevance of retirement planning. Behavioural research often shows that people find it difficult to imagine their future selves, which makes long-term saving feel less urgent. When pensions feel abstract, they can seem like paperwork rather than something connected to real life.

For many Muslims in the UK, there is an additional barrier: uncertainty about whether pension investments are halal. Reports from organisations such as the Chartered Institute of Payroll Professionals (CIPP) and Islamic Finance Guru have found that some Muslims avoid pensions because they are unsure how their money is being invested or whether standard pension funds include interest-bearing or non-permissible assets. This has contributed to lower pension participation among Muslim communities, which is also reflected in research by the Institute for Fiscal Studies (IFS). The IFS found that opt-out rates for workplace pensions are higher among Muslim-majority groups, which can limit access to tax relief and employer contributions that others commonly receive.

The purpose of this article is to offer a different perspective. Instead of seeing pensions as an administrative task, it can be helpful to view them as something much more practical: your future salary.

1. Your Pension Is the Income You Will Use When You Stop Working

When you think about a pension as an investment product, it can feel theoretical. But when you think about it as the income you may rely on when you are older, it becomes more concrete. The money saved into a pension during your working years is intended to form the basis of the income you receive later in life, once regular employment income is no longer present.

This idea is especially relevant because, according to the UK government’s retirement income projections, the state pension alone provides a modest amount that may not match the level of income many people are used to during their working life. Many households therefore need additional private saving to cover living costs in later years, particularly as life expectancy has risen over time.

For Muslims who prefer to avoid interest-based products, building this future salary in a halal way can feel challenging. Standard pension schemes often invest in interest-bearing bonds or mixed funds that include non-permissible companies. As a result, some people disengage entirely, even though they still intend to have an income in later life.

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2. Why Viewing Pensions as “Future Salary” Can Be Helpful

Seeing pension saving as “paying your future self” can make the process more meaningful. Rather than thinking of contributions as money disappearing into a system, they become part of a structured plan to support yourself later.

This perspective is supported by behavioural economics research, including work showing that committing portions of future salary to retirement saving can significantly increase contribution rates (for example, Benartzi & Thaler’s “Save More Tomorrow” programme). Studies suggest that people save more effectively when they visualise their future circumstances. Thinking about your older self — and what level of income you may need — can make pension contributions feel like a practical step rather than an obligation.

When a pension is understood as your future income, saving becomes a form of self-care. It reflects planning, responsibility, and a desire to maintain independence. These ideas align with general Islamic encouragement towards responsible and thoughtful financial behaviour.

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3. Why This Matters for Muslim Investors in Particular

Several reports, including those by the IFS, indicate that reduced participation in pensions can lead to significantly lower retirement balances over time. While outcomes depend on many factors — contributions, market conditions, fees, and personal circumstances — one trend is consistent: people who do not save into pensions have fewer retirement resources than those who do.

For Muslims, the hesitation often comes from uncertainty about how funds are invested. Many standard pension funds include assets linked to riba or prohibited sectors. A SIPP or a pension scheme that offers Shariah-compliant options may help close this gap by allowing Muslim investors to build their future income in a way that aligns with their values.

Increasing availability of Islamic pension options also reflects a wider shift. According to analysis by pension administrators such as Options UK, demand for Shariah-compliant pension solutions has grown as more people seek clarity and control over where their contributions go. This development makes it easier for Muslim savers to participate in the pension system without compromising their religious principles.

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4. The Cost of Treating Pensions as “Optional”

Choosing not to save into a pension can have long-term effects. The IFS has observed that groups with lower participation often miss out on features such as:

• employer contributions
• tax relief
• structured, long-term saving
• proportional benefits from early contributions

These features do not guarantee any particular future outcome, but they can play a role in building retirement resources over time. Without them, individuals may need to rely more heavily on personal savings, family support, or the state pension.

For Muslim communities, this can place additional strain on households later in life. Some Islamic finance experts quoted on Islam Channel note that low pension participation has, in the past, led some individuals to rely primarily on property or cash savings, which come with different risks and limitations.

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5. Why Starting Early Can Make a Meaningful Difference

MoneyHelper explains that pensions benefit from tax relief and long-term compounding within the pension structure. Although investment returns are never guaranteed, the longer contributions remain invested, the more time they have to potentially grow.

This does not mean a pension must be funded with large contributions. Even smaller, regular amounts can contribute towards future income. Islamic financial guidance often emphasises the value of steady, consistent actions — and pension saving fits naturally into this principle.

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6. How a Halal Pension Makes This Perspective More Realistic

A pension becomes more engaging when a saver is confident about what they hold. For Muslim investors, using a Shariah-compliant pension option — whether through a screened portfolio, sukuk allocation, or a fully managed halal SIPP — can reduce uncertainty.

Screened portfolios typically remove interest-bearing instruments, exclude prohibited sectors, and apply debt and income ratio filters. Many providers also publish annual Shariah reports or purification details. This transparency can help individuals feel more connected to the idea of their pension as a future form of halal income.

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7. A Practical Way to Begin Thinking About Your Future Salary

Instead of focusing on pension rules or technical terminology, consider the following questions:

• What level of income might you want in later life?
• Will the state pension alone be enough for your needs?
• Do you know whether your current pension investments are halal?
• Are there small steps you can take now to support your future financial independence?

These questions do not prescribe a course of action but can help frame pensions as a tangible part of your financial future rather than an administrative detail.

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Conclusion — A Small Perspective Shift That Can Make Retirement Feel More Real

Pensions often feel distant until you recognise their purpose. They are not simply investment accounts — they are a structure intended to support your income in later life. For Muslim investors, the existence of halal pension options offers a way to participate in this system with confidence and clarity.

If you would like to understand how a halal pension could work for you, you may find it helpful to explore how a Shariah-compliant SIPP — such as the one offered by Wahed — is structured and managed. Learning more does not require any commitment, but it can help you make informed decisions about how you want to build your future income in a way that aligns with your values.

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Disclaimer:

This article is used for informational purposes only – not financial advice or recommendation. 

SIPP investors should ensure that they are happy to make their own investment decisions and understand that all investments can rise and fall in value. Your capital is at risk and you may get back less than you pay in. You’ll need to be at least 55 (rising to 57 from 2028) before you can access the money in your pension. Pension and tax rules can change and any tax relief and benefits will depend on your personal circumstances. If you’re not sure what’s best for your situation, you should seek professional financial advice.

Past performance is no guarantee of future results. Historical returns, expected returns, and probability projections are provided for informational and illustrative purposes only and are not an indication of future performance. All investing involves risk and you could get back less than you have invested.

As with any investment, a Wahed Invest Ltd investment puts your money at risk, as the value of your investment can go down as well as up. If you are unsure about whether investing is right for you, please seek expert financial advice. Wahed Invest Ltd. is registered in England and Wales (Company No. 10829012), registered office: 87-89 Baker Street, London, W1U 6RJ, UK and is authorised and regulated by the Financial Conduct Authority: FRN 833225.