A new mortgage initiative for Retirees by Cooperative Bank & Enwealth with 40% of pension

Retirees who are already permitted by law to utilize 40% of their pension to purchase a home are now eligible for a new mortgage product launched on the Kenyan market on Thursday.

The Cooperative Bank and Enwealth retiree mortgage initiative is meant to help Kenya’s approximately three million pension scheme members who would otherwise struggle to save enough money to buy a property.

The two companies said in a joint statement that the facility will have an extended repayment duration of up to 20 years, depending on the borrower’s retirement age.

“The new mortgage is the first such facility in the market and has been made possible the Retirement Benefits (Mortgage Loans) Act, Regulations Amendment 2020 that now allows members of pension schemes to utilise up to 40 per cent of their accrued pension benefits as down-payment to buy a home.” 

A pension scheme member can utilize this facility to buy a developed property with a ready title deed or certificate of lease anywhere in Kenya, as long as it is a residential property for the member’s own occupation.

The Mortgage application

The application can be made by an individual pension scheme member or jointly with a spouse, allowing them to access a larger amount by merging their pension benefits.

The product is supposed to aid in the reversal of trends in the country’s pension sector, with research indicating that 60% of retirees die during the first five years of their retirement, with 22% becoming homeless.

According to a 2018 Ipsos Kenya poll, despite the fact that Kenya’s retirement age is officially 65, most pensioners, particularly those in the informal sector, reach that age without a secure retirement package in place.

As part of President Uhuru Kenyatta’s housing program, Kenya amended the pension law last year. To address the country’s 2 million housing unit shortage, the country planned to build 500,000 homes every year.

Director of corporate Institutional Banking at Co-op Bank, Jacqueline Waithaka, described the product as a game-changer during the launch event held at the Co-op Bank Property Hub.

She explained that the product is a purposeful reaction by the bank in support of the government’s Big Four Agenda’s affordable housing component.

The two crucial pillars for a lifetime of financial well-being and dignity, according to Enwealth Financial Services CEO Simon Wafubwa, are owning a home and having an appropriate income when you retire.

“We are excited to pioneer this innovation that will enable a wider pool of Kenyans to realize their dream of owning a home.”