This archive report was first published on 19 May 2020.
Kenya's pension schemes have been sitting on Sh1.3 trillion as of December 31, with a significant portion invested in commercial properties and high-end residential properties for sale. However, a new proposal aims to shift this focus towards rent-to-own properties, allowing members to access up to 40% of their savings to buy a home.
Association of Retirement Benefit Scheme chairman Simon Nyakundi noted that members support the new law, which will encourage home ownership among members. 'Everyone needs a home and most workers' dream is to own a house upon retirement. Enabling members to own a home early in their working life means we are preparing our members for a dignified retirement,' he said.
Experts believe the new pension scheme changes will benefit the sector, with Kenyans expected to increase their savings, anticipating to use part of it to buy a house. This is a departure from the norm where money placed in pension schemes is only released at retirement or in part when a member leaves employment midway.
Under the new proposals, pension schemes will be tasked with playing an oversight role, retaining property ownership documents until a member retires or dies. The trustees will also conduct due diligence for any property to be bought by a member and be party to the contract to ensure no one abuses the facility aimed at benefiting the saving public.
Interviewed savers welcomed the development, saying the current changes will free a portion of savings to members to buy houses. Ken Gichinga, head of business analytics at consulting firm Mentoria Economics, said the proposals will unlock ready cash to a struggling real estate sector, 'thereby encouraging others to save for such causes.'
