MORTGAGE REGULATIONS | Ronalds LLP

Did you know that as per the RBA regulations you can take a mortgage plan using a portion of your accrued pensions benefits?

In a bid to enhance affordable housing as one of the big four agenda by the government, the parliament enacted a legislation through (legal notice no. 192) that would allow pensioners to obtain a mortgage using their retirement benefits. The legislation is known as Retirement Benefits (Mortgage loans) (Amendment) Regulations, 2020, enacted on 14th September 2020.

Among the updated regulations enacted are; 

  • To allow members of retirement benefits schemes to utilize a portion of their accrued benefits to purchase a residential house. The mandate for prescription of minimum requirements to be met by members, the procedure to be followed for this purchase and the determination of processing the application was vested in the respective Scheme’s trustees.
  • That the portion available to the members for the purchase of a residential house at the time of application shall be the lower of: an amount not exceeding forty per cent of the member’s accrued benefits provided that such sum shall not exceed seven million shillings for a defined contribution scheme and an amount not exceeding forty percent of the member’s accrued benefits as determined by an actuary for a defined benefit scheme.
  • That each scheme shall prescribe in the scheme rules the procedure to be followed when a member wishes to utilise a portion of the member’s accrued benefits for the purchase of a residential house. Furthermore, the Trustees of a scheme maybe required by the Authority to submit for approval any information, rules or procedures relating to the purchase of a residential house under these regulations.
  • Finally, to ensure that all schemes amend their scheme rules and/or Trust deeds/ deed of adherence to comply with the provisions of these regulation within twelve months from the date of the commencement of the regulations. This leaves schemes with only 30 days within which they must have complied.

It is in the best interest of all schemes to update their scheme rules to capture the amendments not only for compliance purposes but also for the benefit of their members in accessing affordable housing.

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