- Some civil servants and politicians have objected to the fund saying it does not make sense.
- However, President Ruto has put a spirited defense of the levy saying it will build the country's savings.
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National Assembly Majority Leader Kimani Ichungw'a has explained how the proposed Housing Fund will work, rubbishing suggestions that it is another form of tax to burden Kenyans.
The proposal has elicited sharp reactions from critics of President William Ruto's administration who have warned that it's another mega scandal to swindle Kenyans.
Ichung'wa insisted that while employees will be required to contribute 3 per cent of their basic salary once the Finance Bill, 2023 is enacted, they can opt-out after seven years, including withdrawing their savings.
The employer will also match the contributions but that amount should not exceed Sh5,000 monthly.
This provision of opting out, Ichung'wa explains, makes the Housing Fund a form of an investment plan for Kenyan workers and not another tax.
''Is the Affordable Housing levy a tax? There has been a misconception that affordable housing levy is a tax yet it is not. The levy is a savings plan deduction with benefits accruing to the employee,'' Ichung'wa said.
The Kikuyu MP said the Fund is projected to be part of the country's savings plan that will reduce the borrowing burden on Kenyans.
''It will also enhance the national saving plan,'' he said, echoing President Ruto's vision which he has defended as the surest way to bring down the debt burden.
He said one of the biggest benefits of the affordable housing plan as per the Bill is homeownership for employees who qualify for affordable housing.
''The contributions by the employee shall be used to finance the purchase of a home under the affordable housing scheme,''' he said.
''For employees who are not eligible for affordable housing, upon the expiry of seven years from the date of the start of making the contributions, or after the attainment of retirement age, whichever is earlier the employee may opt-out.''
Ichung'wa said the Fund will also provide an exit where one can transfer contributions to a retirement scheme or convert to a pension.
One can also transfer the benefits to another registered person of their choice.
They can transfer the contributions or the benefits to a spouse or dependent children or receive back all the contributions made in cash hence a savings plan.
''In addition, all the contributions made by employees into the Fund shall also get returns based on the return on,'' Ichung'wa said.