It is the desire of every Kenyan to retire peacefully into a well buit home where they can watch the sunset as they age gracefully. But building a good home can be expensive and almost impossible if your savings are not enough to oversee the process let alone your retirement benefits.
The Retirement Benefits Authority recently announced that following the amendments to the 1997 Retirement Benefits Act, Kenyans will be allowed to use up to 40 per cent of their pension contribution in residential home purchases, under the newly drafted regulations termed as the Retirement Benefits (Mortgage Loans) (Amendment) Regulations, 2020.
National Treasury CS Ukur Yatani published the drafted regulations showing rules and limits of accessing pension savings for a home purchase. Pension contributors can now channel Ksh7 million or a maximum of 40 per cent of their retirement savings to buy their first residential house in changes to the law
“Funds applied towards the purchase of a residential house under these regulations shall first be deemed to have been drawn from the member’s own contributions together with earned investment income and any balance shall be applied from the employer’s contribution and the investment income thereof,” the draft regulations read in part.
Trustees from the different pension schemes will consider applications relating to the utilization of the benefits by members and review their consistency with the retirement act and scheme rules. Currently, workers use their pension savings to guarantee deposits for the purchase of homes and related transaction costs, but not homeownership. This new proposition will allow for direct use of the savings for home purchases so as to support homeownership in the country by reducing financial constrains.
Trustees of the various retirement schemes will lay out the rules to be followed before one can access their pension to fund his or her home purchase.