Retirees in Kuwait can now commit up to 40 percent of their net pension to monthly loan repayments, after the Central Bank of Kuwait (CBK) raised the ceiling from 30 percent, putting them on an equal footing with salaried employees and widening their access to personal financing.

The change comes as part of amendments to the rules governing consumer and housing loans and personal financing. In a circular sent to local banks, investment companies and finance companies, the regulator scrapped the separate 30 percent limit for retirees and replaced it with a single 40 percent cap on net monthly income.

Under the revised rules, employees and retirees alike may now allocate up to 40 percent of their net monthly salary or pension to loan instalments.

The amendments also address financing periods, monthly instalment amounts and the terms of financing contracts with retirees, as well as the maximum credit card limits issued by local banks.

The CBK made clear that lenders must carry out a comprehensive credit assessment before extending financing to retirees. The assessment must set out the financial implications of the loan and establish how much of the borrower's net pension will remain available throughout the repayment period.

Retirees must also be fully informed of the assessment's findings and understand the commitments they are taking on before accepting any financing, the regulator said.

The revised framework is intended to ensure equal treatment across customer categories, strengthen financial inclusion and promote responsible borrowing, while protecting retirees' ability to meet their financial obligations.