Revising mortgage laws to pave the way for retirement home loans

Capital markets

Revising mortgage laws to pave the way for retirement home loans


Nzomo Mutuku, Managing Director of the Retirement Benefits Authority (RBA). PHOTO FILE | NMG

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Summary

  • The pension sector regulator said mortgage lending regulations were being revised to allow plan members to use a slice of savings to buy homes.
  • Retirement Benefits Authority (RBA) chief executive Nzomo Mutuku said retirement savers would benefit once the guidelines are released.

The pension sector regulator said mortgage lending regulations were being revised to allow plan members to use a slice of savings to buy homes.

Retirement Benefits Authority (RBA) chief executive Nzomo Mutuku said retirement savers would benefit once the guidelines are released.

“The modification of the RBA (mortgage loan) regulation is underway and will inform stakeholders once Treasury CS Ukur Yatani releases the amendment,” said the RBA boss.

President Uhuru recently approved the amended Article 38 of the Retirement Benefits Act (1997) allowing retirees to use part of the retirement benefits to purchase residential homes.

Mutuku welcomed the move, saying it would increase home ownership where savers can own a home during their working life.

While the Ministry of Housing and Urban Development has vouched for the release of up to 60% of individual savings for the purchase of a home, RBA regulations should clarify the air at- above the authorized limit and define the conditions for access to retirement savings.

Meanwhile, pension players have called for caution in allowing workers to access savings before retirement.

Association of Retirement Benefit Schemes president Simon Nyakundi said it risks leaving many penniless and unable to meet daily expenses.

“No saver should be allowed to wipe out all their savings because in retirement at age 60, they need an income replacement rate equivalent to about 70% of their last income available for personal use over the next 20 years or more. . The pension is intended for the dignity and comfort of the elderly, ”he said.


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