Banks are frustrating the implementation of a law allowing workers to use their pension savings as guarantee deposits for purchasing houses, an official has said.
The law, which came into effect in 2015 through an amendment in the pension laws, allows workers to use their pension savings to secure financing in excess of what they have saved to buy a home.
But according to Retirement Benefits Authority (RBA) Chief Executive Nzomo Mutuku, banks are not keen to advance loans with pension savings as collateral.
“We wanted to empower workers by making it possible for them to own houses using pension savings as collateral,” said Mr Mutuku in an interview yesterday.
“But a majority of banks don’t want that arrangement. They want the actual house that is being purchased as collateral. They also want to have their hands on the pension savings by insisting that they keep the savings themselves, something that RBA cannot allow,” he added.
Elsewhere, a survey by RBA shows that the overall retirement benefits assets under management by various fund managers grew by 12 per cent from Sh963 billion in June last year to Sh1.8 billion in December.
According to the survey, the growth of the assets can be attributed to improved compliance, gradual recovery in the stock market after the banking crisis in 2016 where some banks went into receivership and the aftermath of the prolonged electioneering period last year.
Fund managers and approved issuers held majority of the assets amounting to Sh904.9 billion.
A total of Sh65.9 billion of the investments was internally administered by the National Social Security Fund, while Sh109 billions of property investments was directly managed by the trustees of the various schemes.
Internally managed property is investments in property not reported by fund managers but are in the schemes’ financial accounts.