Pension administrators have asked for a month to discuss the planned retirement law changes that will allow members to access up to 40 percent of their savings to buy houses.
In its letter to the pensions regulator, the Association of Retirement Benefits Authority (ARBS) says the week-long period granted for public participation was too short for them to exhaustively review and give a substantive reply to the draft regulations.
PRIVATE CONTRACTS
“We wrote to the Retirement Benefits Authority (RBA) seeking an extension of the public participation time as we’ll need to scrutinise the proposals and understand the impact of releasing up to 40 per cent of the Sh1.3 trillion kitty for house-buying,” said Simon Nyakundi, Arbs chairman.
In an interview, Mr Nyakundi said trustees’ fiduciary task was to safeguard pension savings and any attempt at adding them a new role of supervising house purchases, monitoring contracts and vetting house purchase agreements amounts to increasing their scope or work beyond their competence as well as mandate.
“House buying involves private contracts between two parties and that means trustees once included must inject their time and resources to conduct due diligence on a property before allowing its purchase.
“Who will foot this bill and trustees being part-time worker, who will remunerate them?” Mr Nyakundi posed.
SH1.3 TRILLION
Stakeholders have until today (Wednesday) to submit proposals on how the Sh1.3 trillion retirement kitty will be sliced to fund purchase of homes for pension savers.
The Retirement Benefits Authority (RBA) has urged Kenyans to submit their recommendations in soft copy since they were unable to traverse the country to collect views on the proposed bill due to the Covid-19 pandemic.
“Due to restrictions in place due to the Covid-19 pandemic, public participation sessions are not possible. The Draft amendments can be downloaded from our website (rba.go.ke) and interested stakeholders are therefore invited to forward their written submissions to housing@rba.go.ke on or before May,13th, 2020,” said the communiqué signed by the RBA chief executive officer, Mr Nzomo Mutuku.
AFFORDABLE HOUSES
While the draft proposes a 40 per cent cash release towards buying of a house, only new applications will be considered with pension trustees empowered to vet all purchases to determine the viability of the purchase before effecting a direct cash transfer for the intended purchase.
This locks out current mortgage holders and other pension savers who borrowed money to put up houses as trustees of individual schemes are expected to come up with regulations to be followed by pension savers eyeing a slice of their pension kitty.
This locks out current mortgage holders and other pension savers who borrowed money to put up houses as trustees of individual schemes are expected to come up with regulations to be followed by pension savers eyeing a slice of their pension kitty.
The planned changes follow President Kenyatta’s assent to the RBA Act, Section 38 amendment, which allowed pension savers to access a slice of their savings to buy houses.
Housing is one of President Kenyatta’s development pillars, with billions of shilling channelled towards construction of affordable houses in the last few years.
According to the Department of Housing, over 300,000 Kenyans have registered to buy the thousands of houses in the pipeline.
More than 20,000 of these have been making voluntary contributions towards owning homes of their own. As at last month, the savings stood at Sh230 million.