Repossessions ruled out for GIPF home scheme defaulters
Nikanor Nangolo
Windhoek
Members who access housing finance through the Government Institutions Pension Fund’s (GIPF) new pension-backed home loan scheme will not face repossession of their homes, even if they are unable to repay the loan in full by the time they retire, the fund has confirmed.GIPF chief executive officer Martin Inkumbi said the scheme is deliberately structured to protect members’ homes while remaining compliant with pension fund legislation, with the only consequence of default being the forfeiture of the pension lump-sum portion at retirement.
“In the case of this member not being able to pay, they just forgo the one-third portion [of their pension] on retirement,” Inkumbi said while speaking recently on NTV talk show, The Agenda, emphasising that the property itself remains untouched and registered in the member’s name.
Inkumbi explained that under the scheme, members retain ownership of their homes even if they cannot fully repay the pension-backed loan. The one-third portion of their pension, normally paid as a lump sum at retirement, is forfeited, while the remaining two-thirds is paid out as a monthly annuity.
“With pensions, they only take one-third. Two-thirds are still there for them to receive monthly. The one-third, which would normally be the lump sum, is forfeited if it was used to buy or build a home. But at least the member keeps the house and their title deed,” Inkumbi said.
He added that the measure addresses public concerns that the scheme could inadvertently push members into debt with commercial banks.
Direct access, no bank involvement
Addressing questions about whether the scheme merely acts as a bank guarantee, Inkumbi clarified that the loan comes directly from GIPF, not commercial banks.
“The pension-backed home loan scheme is not working through commercial banks. Members borrow directly from administrators who have received capital from GIPF for this purpose,” he said.
The administrators handle transactions on behalf of GIPF, but do not replace banks or earn additional fees from members. Administrative costs are covered by GIPF, and interest paid on the loans flows back into the fund, benefiting the member.
Inkumbi explained that the scheme operates under the Pension Funds Act, which primarily governs the collection, investment, and payout of members’ benefits. Amendments to the Act now allow members to access part of their pensions for housing purposes, including buying, building, renovating, or improving a home.
“The Pension Funds Act stipulates exactly what a pension fund should do: collect premiums, invest them, and pay pension benefits,” he said. “Once a fund can fulfil that, it may consider providing other benefits, such as housing loans.”
Members can access up to one-third of their pension benefits for housing. The funds must be repaid with interest, structured as an investment rather than a grant, ensuring the member’s future retirement security is not compromised.
Balancing housing support with retirement security
Inkumbi stressed that the repayment model is designed to help members acquire homes without undermining their retirement income.
“The rationale is to assist the member in acquiring a house, improving their property, and still maintain a reasonable pension benefit for retirement,” he said.
By structuring the scheme this way, GIPF aims to support home ownership while safeguarding both the fund’s financial integrity and the long-term security of members, Inkumbi emphasised.
— [email protected]
Windhoek
Members who access housing finance through the Government Institutions Pension Fund’s (GIPF) new pension-backed home loan scheme will not face repossession of their homes, even if they are unable to repay the loan in full by the time they retire, the fund has confirmed.GIPF chief executive officer Martin Inkumbi said the scheme is deliberately structured to protect members’ homes while remaining compliant with pension fund legislation, with the only consequence of default being the forfeiture of the pension lump-sum portion at retirement.
“In the case of this member not being able to pay, they just forgo the one-third portion [of their pension] on retirement,” Inkumbi said while speaking recently on NTV talk show, The Agenda, emphasising that the property itself remains untouched and registered in the member’s name.
Inkumbi explained that under the scheme, members retain ownership of their homes even if they cannot fully repay the pension-backed loan. The one-third portion of their pension, normally paid as a lump sum at retirement, is forfeited, while the remaining two-thirds is paid out as a monthly annuity.
“With pensions, they only take one-third. Two-thirds are still there for them to receive monthly. The one-third, which would normally be the lump sum, is forfeited if it was used to buy or build a home. But at least the member keeps the house and their title deed,” Inkumbi said.
He added that the measure addresses public concerns that the scheme could inadvertently push members into debt with commercial banks.
Direct access, no bank involvement
Addressing questions about whether the scheme merely acts as a bank guarantee, Inkumbi clarified that the loan comes directly from GIPF, not commercial banks.
“The pension-backed home loan scheme is not working through commercial banks. Members borrow directly from administrators who have received capital from GIPF for this purpose,” he said.
The administrators handle transactions on behalf of GIPF, but do not replace banks or earn additional fees from members. Administrative costs are covered by GIPF, and interest paid on the loans flows back into the fund, benefiting the member.
Inkumbi explained that the scheme operates under the Pension Funds Act, which primarily governs the collection, investment, and payout of members’ benefits. Amendments to the Act now allow members to access part of their pensions for housing purposes, including buying, building, renovating, or improving a home.
“The Pension Funds Act stipulates exactly what a pension fund should do: collect premiums, invest them, and pay pension benefits,” he said. “Once a fund can fulfil that, it may consider providing other benefits, such as housing loans.”
Members can access up to one-third of their pension benefits for housing. The funds must be repaid with interest, structured as an investment rather than a grant, ensuring the member’s future retirement security is not compromised.
Balancing housing support with retirement security
Inkumbi stressed that the repayment model is designed to help members acquire homes without undermining their retirement income.
“The rationale is to assist the member in acquiring a house, improving their property, and still maintain a reasonable pension benefit for retirement,” he said.
By structuring the scheme this way, GIPF aims to support home ownership while safeguarding both the fund’s financial integrity and the long-term security of members, Inkumbi emphasised.
— [email protected]
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