http://www.theeastafrican.co.ke/business/-/2560/683166/-/5fo2qmz/-/index.html

Employees of local authorities and water and sewerage companies in the country have an opportunity to use part of their pension to purchase homes.

This is after mortgage lender Housing Finance signed a pension mortgage agreement with the Local Authorities Pension Fund (LAPTRUST).

Under the deal, the fund’s members can use up to 60 per cent of their accumulated pension benefits as additional collateral to access any of Housing Finance’s mortgage products.

“The Local Authorities Pension Fund benefit due to an employee can be used as security against the loan without eroding the retirement benefit,” said Housing Finance managing director Frank Ireri during the signing ceremony.

LAPTRUST managing trustee Hosea Kili said the partnership is aimed at developing suitable tailor-made mortgage finance products for its members.

The fund, which has an estimated value of Sh7 billion, has 24,000 members drawn from 175 local authorities and 60 water and sewerage companies in the country, although some civic authorities have financial problems.

Official figures indicate that 150,000 new and additional housing units are required in urban areas every year with actual supply estimated at 35,000 units annually.

The agreement makes it the first major pension fund to take advantage of an amendment to the Retirement Benefits Authority Act, which allows members to use their pension scheme funds as guarantee or collateral for housing loans.