Union hits back at plan to scrap payroll deduction system
Many believe system guards against excessive debt
Nikanor NangoloWindhoek
Public Service Union of Namibia (PSUN) secretary-general Ndjizuvee Haakuria has condemned government’s plans to abolish the longstanding Payroll Deduction Management System (PDMS), warning it could expose civil servants to riskier loans and higher interest rates.
He warned that plans to phase out the system would mean government employees would be forced to rely on bank debit orders, a less reliable option that could lead to problems such as insufficient funds when multiple deductions occur.
His remarks follow the finance ministry’s recent announcement of plans to phase out the two-decade-old system by 30 November, a move that has sparked outrage and concern within the microlending industry, which relies heavily on the system to secure repayments and manage credit risk.
Haakuria argued that the current system is efficient and benefits everyone.
“As for the government’s claim that the system is not in line with the Labour Act, I disagree. No one takes a loan from Letshego or Entrépo, or joins a union, without giving written consent authorising deductions from their salary. Everything is done in writing,” he told Namibian Sun on Monday.
He said the ministry should provide other reasons for wanting to remove the system.
“It has helped maintain financial discipline among government employees and provided stability for both lenders and unions. For example, here we load our members at month-end, and union subscriptions, which we depend on, are deducted without any problem. So, we fully support keeping the system.”
He added that while the ministry claims to have consulted all stakeholders, PSUN was never invited.
“As far as I know, PSUN was never invited to any consultation meeting by the Ministry of Finance. They probably consulted the Namibia Public Workers Union (Napwu) for obvious reasons, along with some other stakeholders. The only meetings we attended were ones called by other stakeholders to brief us,” he said.
Win win for everyone Haakuria stressed that there are many benefits to the PDMS system and it should remain intact.
He noted that deductions under the system began many years ago. “Back then, it was handled directly by the ministry itself, especially deductions for the unions. However, there were problems. For example, I could submit details for a PSUN member to the ministry, but the member wouldn’t be loaded in the system, and so on. There were many such issues,” he said.
“To improve efficiency, Avril was brought in to manage payroll deductions. Each ten-code holder now loads their own membership. For example, PSUN loads its members at the office, and Avril processes the deductions. Sanlam does the same. Entrépo does the same. Letshego does the same.”
Haakuria further explained that the system includes a built-in feature to ensure that no more than one-third of an employee’s take-home pay can be deducted, especially for loan repayments.
“Now, for instance, if a government employee takes a loan from Entrépo, the lender knows deductions are guaranteed, so the loan is low-risk. As a result, interest rates are lower, giving both lender and borrower peace of mind.”
Higher risksAsked to comment on how the union feels about the government’s plans to abolish the system, Namibia Public Workers Union (Napwu) general secretary Petrus Nevonga said they are in talks with the government to find an amicable solution between the union and the authorities.
Labour research expert Herbert Jauch said before any payroll deductions are made, it is important to ensure they are legitimate and not subject to abuse. “There is also a limit on how much can be deducted as a proportion of total income. Furthermore, deductions must be made reliably and regularly; otherwise, the person may be blacklisted for missed payments,” he said.
“Therefore, a reliable, up-to-date system is essential, one that allows for corrections when, for instance, the deduction amount changes or other adjustments are needed,” Jauch explained.
“Without such a system, those on whose behalf deductions are made could face serious consequences, including being blacklisted. That’s why the system must be both reliable and authorised by the person from whom the deductions are taken.”
Money worriesJust a week ago, civil servants raised concerns over the finance ministry’s plan to cancel the PDMS by 30 November, fearing the move could plunge many into financial distress.
A nationwide online survey conducted by Fin Fit Investment and Avril Payment Solutions explored government employees’ perceptions, satisfaction levels and expectations regarding the PDMS and its discontinuation, as well as insights into their financial behaviour, capability and debt management patterns.
Nearly three-quarters (72%) of respondents agreed that the PDMS helps them avoid taking on more debt than they can manage, highlighting the system’s perceived protective function.
Among the 14% who disagreed, most cited unaffordable loan approvals, inadequate credit checks or the need to borrow further from informal sources.
The survey found that payroll deductions are dominated by personal loans (79.5%), followed by insurance policies (64.9%) and union or association fees (33.6%), reflecting the system’s deep integration into employees’ financial routines.
“Around 70% of respondents reported that payroll deductions make it easier to manage monthly finances. Many attributed this to predictability and automatic discipline, though some felt the system limited their control,” the survey found.
Participants expressed concern that removing the PDMS would hinder their ability to keep up with payments and limit access to loan options.
Legal action
Last week, financial services firm Entrépo Finance filed an urgent application in the Windhoek High Court to stop the finance ministry from discontinuing the PDMS, which enables salary-linked loan repayments for civil servants.
Entrépo argues that the ministry’s decision will disrupt access to affordable loans for thousands of government employees and could cripple its operations, which depend entirely on the PDMS mechanism.
In court papers, Entrépo director Jan Louw said the company’s business model, which allows it to offer lower interest rates and quick access to emergency loans for medical or educational needs, is built entirely around the system.
He warned that the ministry’s move could jeopardise a N$300 million investment, as financiers have raised concerns about Entrépo’s viability if the system is scrapped.
[email protected]
Public Service Union of Namibia (PSUN) secretary-general Ndjizuvee Haakuria has condemned government’s plans to abolish the longstanding Payroll Deduction Management System (PDMS), warning it could expose civil servants to riskier loans and higher interest rates.
He warned that plans to phase out the system would mean government employees would be forced to rely on bank debit orders, a less reliable option that could lead to problems such as insufficient funds when multiple deductions occur.
His remarks follow the finance ministry’s recent announcement of plans to phase out the two-decade-old system by 30 November, a move that has sparked outrage and concern within the microlending industry, which relies heavily on the system to secure repayments and manage credit risk.
Haakuria argued that the current system is efficient and benefits everyone.
“As for the government’s claim that the system is not in line with the Labour Act, I disagree. No one takes a loan from Letshego or Entrépo, or joins a union, without giving written consent authorising deductions from their salary. Everything is done in writing,” he told Namibian Sun on Monday.
He said the ministry should provide other reasons for wanting to remove the system.
“It has helped maintain financial discipline among government employees and provided stability for both lenders and unions. For example, here we load our members at month-end, and union subscriptions, which we depend on, are deducted without any problem. So, we fully support keeping the system.”
He added that while the ministry claims to have consulted all stakeholders, PSUN was never invited.
“As far as I know, PSUN was never invited to any consultation meeting by the Ministry of Finance. They probably consulted the Namibia Public Workers Union (Napwu) for obvious reasons, along with some other stakeholders. The only meetings we attended were ones called by other stakeholders to brief us,” he said.
Win win for everyone Haakuria stressed that there are many benefits to the PDMS system and it should remain intact.
He noted that deductions under the system began many years ago. “Back then, it was handled directly by the ministry itself, especially deductions for the unions. However, there were problems. For example, I could submit details for a PSUN member to the ministry, but the member wouldn’t be loaded in the system, and so on. There were many such issues,” he said.
“To improve efficiency, Avril was brought in to manage payroll deductions. Each ten-code holder now loads their own membership. For example, PSUN loads its members at the office, and Avril processes the deductions. Sanlam does the same. Entrépo does the same. Letshego does the same.”
Haakuria further explained that the system includes a built-in feature to ensure that no more than one-third of an employee’s take-home pay can be deducted, especially for loan repayments.
“Now, for instance, if a government employee takes a loan from Entrépo, the lender knows deductions are guaranteed, so the loan is low-risk. As a result, interest rates are lower, giving both lender and borrower peace of mind.”
Higher risksAsked to comment on how the union feels about the government’s plans to abolish the system, Namibia Public Workers Union (Napwu) general secretary Petrus Nevonga said they are in talks with the government to find an amicable solution between the union and the authorities.
Labour research expert Herbert Jauch said before any payroll deductions are made, it is important to ensure they are legitimate and not subject to abuse. “There is also a limit on how much can be deducted as a proportion of total income. Furthermore, deductions must be made reliably and regularly; otherwise, the person may be blacklisted for missed payments,” he said.
“Therefore, a reliable, up-to-date system is essential, one that allows for corrections when, for instance, the deduction amount changes or other adjustments are needed,” Jauch explained.
“Without such a system, those on whose behalf deductions are made could face serious consequences, including being blacklisted. That’s why the system must be both reliable and authorised by the person from whom the deductions are taken.”
Money worriesJust a week ago, civil servants raised concerns over the finance ministry’s plan to cancel the PDMS by 30 November, fearing the move could plunge many into financial distress.
A nationwide online survey conducted by Fin Fit Investment and Avril Payment Solutions explored government employees’ perceptions, satisfaction levels and expectations regarding the PDMS and its discontinuation, as well as insights into their financial behaviour, capability and debt management patterns.
Nearly three-quarters (72%) of respondents agreed that the PDMS helps them avoid taking on more debt than they can manage, highlighting the system’s perceived protective function.
Among the 14% who disagreed, most cited unaffordable loan approvals, inadequate credit checks or the need to borrow further from informal sources.
The survey found that payroll deductions are dominated by personal loans (79.5%), followed by insurance policies (64.9%) and union or association fees (33.6%), reflecting the system’s deep integration into employees’ financial routines.
“Around 70% of respondents reported that payroll deductions make it easier to manage monthly finances. Many attributed this to predictability and automatic discipline, though some felt the system limited their control,” the survey found.
Participants expressed concern that removing the PDMS would hinder their ability to keep up with payments and limit access to loan options.
Legal action
Last week, financial services firm Entrépo Finance filed an urgent application in the Windhoek High Court to stop the finance ministry from discontinuing the PDMS, which enables salary-linked loan repayments for civil servants.
Entrépo argues that the ministry’s decision will disrupt access to affordable loans for thousands of government employees and could cripple its operations, which depend entirely on the PDMS mechanism.
In court papers, Entrépo director Jan Louw said the company’s business model, which allows it to offer lower interest rates and quick access to emergency loans for medical or educational needs, is built entirely around the system.
He warned that the ministry’s move could jeopardise a N$300 million investment, as financiers have raised concerns about Entrépo’s viability if the system is scrapped.
[email protected]
Comments
Namibian Sun
No comments have been left on this article