This archive report was first published on 6 May 2020.
On May 6, 2020, the Treasury took a significant step towards kick-starting the economy by proposing a draft law to amend pension rules.
The proposed changes aim to allow contributors to use part of their pension funds to finance housing needs, a decision that has been discussed for years.
According to the draft law, a ceiling of 40 percent or Sh7 million will be placed on the funds that can be accessed.
This move is expected to spur the economy and the construction sector, as contributors will be able to use their funds to build their own homes, potentially earning better returns than keeping their money in schemes that hardly beat inflation.
Additionally, a comfortable employee is more productive in the long run, and contributors will have more democratic leeway on how their funds are used.
However, the government needs to ensure that watertight rules are in place to prevent fly-by-night housing developers from conniving with trustees to divert funds without contributor knowledge.
Overall, the draft rules should be strengthened through consultations to make sure the concept comes to fruition for the benefit of contributors and the economy.
