Current regulation allow for pension backed property loans

The Namibia Financial Institutions Supervisory Authority (NAMFISA) says its current regulations allow pension funds to directly lend members a portion of their pension fund savings to buy immovable property or to make renovations to existing immovable property.

“NAMFISA is hereby informing the public that Section 19(5) of the Pension Funds Act, 1956 (Act No. 24 of 1956) (“the Pension Funds Act”) makes provision for pension funds to directly lend members a portion of their pension fund savings to buy immovable property or to make renovations to existing immovable property. In addition, the Pension Funds Act allows pension funds to furnish pension-backed guarantees to persons providing housing loans to its members for the same purpose,” NAMFISA Chief Executive Officer Kenneth Matomola said on Monday.

He said the shelved contentious Financial Institutions and Markets Act also provides for pension backed property loans.

“The Financial Institutions and Markets Act, 2021 (Act No. 2 of 2021) (“FIMA”), which will come into operation at a date to be determined by the Minister of Finance, similarly provides for direct housing loans by funds to members as well as pension-backed guarantees,” the NAMFISA CEO said.

He urged pension fund members to familiarize themselves with fund rules, including their rights and responsibilities.

“Fund rules are the constitution of a pension fund and must make provision for a particular fund to grant direct housing loans or pension-backed housing loan guarantees to members. The fund rules will also determine the extent of the loan or guarantee that can be furnished to members,” Matomola said.

This comes as the country’s largest pension fund, the Government Institutions Pension Fund (GIPF) in March announced that it is at an advanced stage of launching a Pension Backed Home Loan scheme that will allow members to use their pension as collateral to buy or renovate property.

The GIPF said the planned loan scheme will also allow funding for the construction of property even in the rural areas.

The proposed scheme comes after an outcry from civil servants and other GIPF participating employers who were failing to secure housing loans.