Alexander Forbes members can now use their pension as mortgage security

A retirement benefits and financial services company, Alexander Forbes has launched a mortgage facility through their multi-employer retirement fund, the Alexander Forbes Retirement Fund.

While addressing the media during their Annual General Meeting, the fund’s Chairperson Ms. Lucy Kambuni shared the driving motivation behind the launch of the mortgage facility as the need to improve the utility of benefits in the retirement fund for the overall betterment of its members’ lives, over and above providing for retirement benefits in old age.

Mr. James Olubayi, the Group Chief Executive Officer and a Trustee of the umbrella retirement fund said that the mortgage facility would enable the members of the retirement fund to utilize up to 60% of their accumulated benefit under the Fund as a security for purposes of securing a mortgage. He added that to date, housing needs of Kenyans by far outstrip the supply and there was 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.

The Divisional Head of Umbrella & Retail Solutions at Alexander Forbes, Ms. Angela Okinda who heads the management of the Fund noted that the launch of the mortgage facility was a great milestone. “For the everyday Kenyan, mobilization of capital to undertake the purchase of a property is quite an uphill task,” Ms Okinda said. The high cost of living with daily consumptive needs competing for the same disposable income as savings and investment, the latter usually loses, she argued. “We want to change the lives of our 22,000 members by making a meaningful impact to their long term well being,” Ms Okinda added. She said the facility will be one of the ways through which more Kenyans can have a permanent shelter and a title deed.

The Alexander Forbes Retirement Fund (AFRF), one of a kind was the first multi-employer umbrella retirement fund in East Africa. Established seven years ago, the fund has experienced tremendous growth with assets worth Kes 10 billion making it a faster growth path in the retirement industry. Currently it is providing retirement and other related benefits such as ill-health early retirement, immigration as well as insured death in service and disability benefits to its 22,000 members and an estimated 300,000 beneficiaries.

So far the fund has about 90 employers participating in it. Ms. Okinda mainly attributed this growth to the fact that the umbrella fund provides a simple, practical, cost effective solution to employers who are seeking a professionally managed fund for their employees.

Mr. John Okondo, a trustee said the Fund will continue to devise various strategies that benefit members to better plan their personal and retirement finances.

Members of the Fund can now apply to utilise up to 60% of their mortgage (or the value of the house, whichever is lower) as a security. This implies that the house is the primary charge and the pension is a secondary charge. In the event of default, the financial institution would first dispose of the house to meet the outstanding obligation. It is only if the proceeds from the same of the house are not sufficient, then the consideration of recover from pension can be pursued.