The Retirement Benefits Authority (RBA) allows for individuals to withdraw up to 40.0% of their accumulated pension savings, capped at KES 7.0 mn, to directly finance the purchase of a residential house. Alongside this, existing rules under the Retirement Benefits (Mortgage Loans) Regulations permit members to assign to use up to 60.0% of their retirement savings as collateral for mortgage. This was one of the measures the government enacted to alleviate the housing deficit in the country. According to the 2025 KNBS Housing Survey, only 6.3% of people acquire homes through employer schemes, while 38.7% and 34.1% of owners used commercial banks and SACCOs.
For years, banks have dominated the mortgage market, but their products remain out of reach for many. According to the latest KMRC Research Brief (2024), the total value of outstanding mortgage loans rose by 7.5% to KES 281.5 bn from KES 261.8 bn . Yet, mortgage uptake remains low, with only about 26,000 active accounts nationwide. Interest rates average rose to 14.3% in 2023 from 12.3% in 2023, and non-performing loan ratio stood at 14.4%, signaling affordability challenges and limited access. High rates, coupled with stringent bank requirements, have historically locked out many potential homeowners.
By contrast, the pension-backed mortgage option allows workers to leverage their own savings, up to KES 7.0 mn or 60.0% of their accrued benefits to purchase a home. This approach bypasses the hurdles of bank credit checks, collateral requirements, and high interest rates. It’s especially transformative for informal sector workers, gig economy participants, and SMEs who often lack access to formal credit. Additionally, pension-backed mortgages lower the lender’s risk because the retirement savings guarantee repayment. This, in turn, can make mortgages more accessible to employees with steady contributions but without large amounts of cash at hand.
For individuals, this option is a lifeline in the journey toward home ownership, allowing them to leverage savings that would otherwise remain untouchable until retirement. For the broader economy, it stimulates housing demand, supports the construction sector, and creates jobs in related industries. The pensions sector also benefits, as schemes offering this feature become more relevant to members, though trustees must carefully manage liquidity and educate members on the trade-offs between securing a home today and preserving future retirement income.
The ability to use up to 60.0% of retirement savings for a mortgage is therefore a game-changer. It bridges the gap between pensions and real estate, two sectors critical to Kenya’s long-term economic growth. Employers now have an opportunity to give their staff access to this benefit. By joining the Cytonn Umbrella Retirement Benefits Scheme, companies can empower employees to secure housing while safeguarding their retirement, a win for workers, employers, and the economy at large.
