An amendment to the Retirement Benefits Authority Act (1997) gazetted by Treasury will see pension scheme members access a portion of their accrued benefits to buy residential houses.
In The Retirement Benefits (MORTGAGE LOANS) (Amendment) Regulations, 2020 Treasury CS Ukur Yattani authorized Kenyans to use part of their retirement benefits to buy residential houses.
The law stipulates that Kenyans will access up to 40 percent of their accrued benefits for residential house purchase provided the sum shall not exceed seven million shillings. However, the member funds contained in a post-retirement medical fund shall not be used to determine the accrued retirement benefits or be used for the purchase of the residential house.
A scheme member will access the funds to purchase a house as a one-off benefit. The law locks out scheme members already receiving pension earning, members already on early retirement, and those that have attained the retirement age.
Every scheme shall prescribe the minimum requirements to be met by their members for a mortgage issuance application. The trustees will determine the application from the member within 90 days of the application being lodged.
Other requirements include:
- A residential house eligible for purchase shall only be a house that has been certified for occupation before the intended purchase
- Where a member already has mortgage facility from another institution at the time of the application, that member shall not be allowed to utilize the member’s accrued benefits to offset the balance on that mortgage facility
The new law has widened the definition of an institution that can offer a mortgage to include SACCO, insurance company, pension fund, or a project approved by the ministry of housing.
The new development will see an increase in homeownership as pension savers will be able to own a house during their working life. The law is in line with government’s BIG4 AGENDA on Housing as it increases the funding sources besides promoting savings to pension schemes.
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