YPNSA case study

The birth of a child is a momentous occasion in anyone’s life. It is a time of joy and happiness but can also be one of some anxiety. Many parents choose to save for their children’s future, whether it is to help them buy a house, go to university or fund their first car. For Muslim parents this can be complicated by the desire for their children’s money to be saved in a manner which is in keeping with their faith.

Meet Maryam and Farook, who have just celebrated the birth of their first child, a beautiful baby girl who they have named Almas.

Naturally Maryam and Farook wish to do the very best that they can for their daughter’s future so they have decided to save a regular amount every month, so that she has a nice contribution towards the cost of her college education when she is older.

Maryam and Farook were both born in South London, where they still live and work. Farook is a Procurement Manager at a local Airport, while Maryam is an events co-ordinator; they decide that they are comfortably able to save £100 a month for Almas’ college fund.

As practising Muslims, it is very important to both Maryam and Farook that their daughter’s savings are halal, but they would also like to make some return on the savings if possible, so they decide to look at the options which are available to them.

After researching Islamic savings accounts with a number of high street banks, they choose to save for Almas’ future using a Young Person’s Notice Savings Account (YPNSA) with Al Rayan Bank. They are drawn to this account because, unlike conventional banks which offer some Islamic products, Al Rayan Bank is a wholly Sharia compliant bank. This means that as well as never charging or receiving interest, Al Rayan Bank will never invest any money in sectors which are not permitted under Sharia, such as tobacco, alcohol, gambling, arms or pornography. 

Furthermore, Al Rayan Bank is able to deliver a Sharia compliant return on Almas’ college fund. It does this by investing the deposit and sharing the profits of the investment with Almas. Strictly speaking, the expected profit rate is not guaranteed, but Maryam and Farook are reassured by the fact that in its whole existence Al Rayan Bank has never paid any of its customers less profit that it expected to; in fact they are pleased to find out that at times Al Rayan Bank has paid more than it expected to its YPNSA customers.

The account is set up and the couple begin to save every month. They can withdraw the money at any time, providing they give 90 days’ notice. Also, if they choose to do so, they can give Almas limited access to funds when she turns 14. Otherwise they need do nothing else until Almas turns 16 when the account will transfer to her automatically. 

Maryam, Farook and Almas are not real people, but their situation is one that is shared by many of Al Rayan Bank’s customers. Al Rayan Bank not only offers a range of features that provide customers with flexibility and value, but their savings accounts are also fully Sharia compliant, meaning that a customer can save for their family’s future without compromising the principles of their faith. 

If you are considering setting up a fund for a child's further/ higher education, we recommend that you first talk to an independent financial advisor.