Role of Pension Backed Mortgages in Affordable Housing in Kenya
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Date
2021-10-12Author
Misiko, V. A.,
Kieti, R.M.
Type
ArticleLanguage
en_USMetadata
Show full item recordAbstract
Access to affordable housing is a challenge to many public sector employees who retire without a home despite
having worked and saved towards pension. One of the initiatives by the Government of Kenya (GOK) to increase
access to housing is by amending the Retirement Benefits Act (RBA) to allow pension funds to be used as collateral
for purchase of a home. The uptake of Pension Backed Mortgages (PBMs) by public sector employees in Kenya
has, however, been low. This study sought to evaluate the role of Pension Backed Mortgages (PBMs) in provision
of affordable housing among public sector workers in Nairobi City in Kenya. The population comprised of pension
scheme administrators, financial institutions, RBA officials and Civil Servants who are pension contributors.
Purposive sampling was employed targeting scheme administrators, pensioners, managers of financial institutions
and Retirement Benefits Authority. Data were obtained from primary and secondary sources and analyzed and
presented in tables and diagrams. Findings indicate that uptake of PBMs by public sector workers in Kenya has
remained low, even after amending the Retirement Benefits Mortgage Regulations to allow pensioners to use
about 60% of pension savings as collateral. This is attributed to factors such as: high mortgage interest rates,
lack of awareness on use of pension funds as collateral, lengthy mortgage processes, lack of serviced land, stiffer
requirements limiting access to long term loans and, process elements such as financing, planning, external
environment, execution, and construction. The study concludes that the uptake of pension backed mortgages
has not significantly contributed to provision of affordable housing in Kenya, and recommends vigorous public
sensitization, creation of awareness, and legal reforms geared towards enhancing and streamlining use of pension
funds for wider access to affordable housing among public sector pensioners in Kenya.
URI
http://uonjournals.uonbi.ac.ke/ojs/index.php/ahr/article/view/828http://erepository.uonbi.ac.ke/handle/11295/155615
Citation
Misiko, V. A., Kieti, R.M. (2021). Role of Pension Backed Mortgages in Affordable Housing in Kenya. AFRICA HABITAT REVIEW, 15(1), 2185–2194.Publisher
Africa Habitat Review