Update on the Retirement Benefits (Mortgage Loans) (Amendment) Regulations 2020

The Retirement Benefits (Mortgage Loans) (Amendment) Regulations 2020 came into force on 14 September 2020 following an amendment to Section 38 (1A) of the Retirement Benefits Act, through the Tax Laws Amendment Act, 2020.

The Regulations amended the Retirement Benefits (Mortgage Loans) Regulations, 2009 and made it possible for scheme members to withdraw up to 40% of their accrued benefits, or Kshs.7 million, for the purpose of purchasing a residential house.

On 23 November 2022, the High Court of Kenya issued a judgement quashing the 2020 amendment to Section 38 (1A), as well as the Retirement Benefits (Mortgage Loans) (Amendment) Regulations 2020. The High Court further prohibited the implementation, giving effect or enforcement of the same.

In compliance with the judgement, trustees should not make further disbursements pursuant to the Retirement Benefits (Mortgage Loans) (Amendment) Regulations 2020. It is also not possible for trustees to honour obligations which were entered into pursuant to the nullified law, including professional undertakings as this would contravene the court’s orders.

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