Answer
Wa `alaykum as-salamu wa rahmatullahi wa barakatuh.
In the Name of Allah, Most Gracious, Most Merciful.
All praise and thanks are due to Allah, and peace and blessings be upon His Messenger.
In this fatwa:
1- Zakah is the third pillar of Islam that is ordained on rich Muslims who own the nisab; and it is paid every lunar year.
2- As for your case, you have to pay Zakah for the saved money, not for the money you spend on yourself or your family.
In his response to your question, Prof. Dr. Monzer Kahf, Professor of Islamic Finance and Economics at Qatar Faculty of Islamic Studies, states:
The matter is much simpler than you think. Since you live off the pension of your late father, please, remember when you had an amount that is equal to US $ 1500 for the first time, this makes the beginning of your Zakah year and the first time you are required to pay Zakah was 354 days after that date (which is a whole year – al-hawl in Arabic).
The rate is 2.5% of the balance you have on the 354th day. You repeat the same every 354 days from then. Also, keep in mind that past due Zakah does not die out; you still should pay it.
Now let me explain the following:
Zakah is not on the salary/wage itself but on the saved part of it.
The hawl is a lunar year and begins the first time you acquire the nisab – the amount of money due to Zakah (which may come from any source including gifts, saving from salary, any other earning, inheritance, etc.)
The nisab is what determines being subject to Zakah. It comes from 200 Dirham (silver) or 20 dinar (gold) my estimation of it is about US $1500. I don’t go by the speculative increase in the prices of gold over the last few years because they do not reflect the real value. So, I keep founding it on older prices.
I like you to remember that since pensions systems all over the world assign specific amount to each family member of the deceased, if there is any saving over time out of the pension, each family member (minor or adult) is required to pay his or her own due Zakah by applying the same procedure mentioned above.
Allah Almighty knows best.
Editor’s note: This fatwa is from Ask the Scholar’s archive and was originally published at an earlier date.