Alexander Forbes launches mortgage pension plan

Retirement benefits management company Alexander Forbes has launched a programme that will enable employees secure mortgages using their pension.

Speaking in Nairobi on Friday, the Alexander Forbes group chief executive officer James Olubayi said that members can use up to 60 per cent of their accumulated benefits under the fund as security for purposes of acquiring a mortgage.

“Housing needs of Kenyans by far outstrip the supply. This is now an opportunity for members of the retirement fund to leverage off their existing savings to secure a home without risking their long term financial security in retirement. Members of the retirement fund can utilise up to 60 per cent of their accumulated benefits as security for acquiring the mortgage,” said Mr Olubayi.

The Alexander Forbes Retirement Fund was started in August 2005 and has so far attracted 86 participating employers and 22,000 members. The fund is worth Sh10 billion in assets.

According to Angela Okinda, who heads the management of the fund, the mortgage facility is aimed at enabling members secure additional funding beyond the 90 per cent that is ordinarily provided by financiers leaving the applicant to raise an additional 10 per cent and more to cater for stamp duty charges.

“The facility will improve the credit worthiness of our members so that they get more than 90 per cent financing for mortgages that is normally provided by financing institutions,” said Ms Okinda.

With the introduction of the mortgage facility, Alexander Forbes makes an entry into the fast growing real estate market characterised by soaring prices of houses, which creates an opportunity for the fund to attract more members and increase its worth.

Last year, the fund earned 27 per cent of its accumulated assets in returns to the pension section up from 15 per cent that was earned in 2011.