Namibia backs pension-funded housing loans for civil servants
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The ministry of finance has endorsed a pension-backed housing loan scheme (PBHLs), enabling civil servants to use their pension savings as collateral for affordable property purchases.
The ministry of finance has thrown its weight behind a pension-backed housing loan scheme (PBHLs) that will make it affordable for civil servants to acquire properties using their pensions as collateral.
Ministry of finance executive director Michael Humavindu in a letter to the Namibia Financial Institutions Supervisory Authority (Namfisa) CEO Kenneth Matomola said the ministry would work around the clock to finalise mechanisms around its implementation.
Once in operation, civil servants will be able use a portion of their pensions to fund intended property purchases.
Civil servants would be to pay a rate of interest equal to the repo rate charged by the Bank of Namibia in addition to a 2.5% interest per annum, the circular said.
"We deem it important to front-load and finalise the pension-backed housing loan scheme for the alleviation of the housing challenge, especially among our civil servants who are unable to afford home loan schemes in the commercial banking space," Humavindu said.
PBHLs have become a very important part of the pension fund industry as they give members the chance to use their pension benefits/savings (fund credit) to buy immovable property
such as houses, flats, apartments or land, or to make renovations to their homes. PBHLs have become popular in Namibia and are mostly being used for home improvement
projects (i.e. renovations), rather than for buying new homes, because the size of the loans can be small.
PBHLs are allowed and managed in terms of the Pension Funds Act of 1956. The Act states that a loan that is given to a member through a pension fund, is an investment made by the fund in the member to enable him/her to: pay-off or settle a loan that’s been granted to the member by another party, such as a bank or building society, for immovable
property. Immovable property refers to assets such as houses, flats, apartments or land on which a house or a flat or an apartment will be built.
Buy a dwelling or land on which it’s expected that a dwelling will be built by the member or his/her spouse; and Make renovations, additions or alterations to the member’s
existing house. This means that the Pension Funds Act allows funds to give loans to its members, but only for the reasons given. When a member applies for a PBHL, s/he must know that it must be repaid to the fund. These loans are given for housing purposes only and may not be used as a way to allow members to abuse/access their retirement benefits early.
Ministry of finance executive director Michael Humavindu in a letter to the Namibia Financial Institutions Supervisory Authority (Namfisa) CEO Kenneth Matomola said the ministry would work around the clock to finalise mechanisms around its implementation.
Once in operation, civil servants will be able use a portion of their pensions to fund intended property purchases.
Civil servants would be to pay a rate of interest equal to the repo rate charged by the Bank of Namibia in addition to a 2.5% interest per annum, the circular said.
"We deem it important to front-load and finalise the pension-backed housing loan scheme for the alleviation of the housing challenge, especially among our civil servants who are unable to afford home loan schemes in the commercial banking space," Humavindu said.
PBHLs have become a very important part of the pension fund industry as they give members the chance to use their pension benefits/savings (fund credit) to buy immovable property
such as houses, flats, apartments or land, or to make renovations to their homes. PBHLs have become popular in Namibia and are mostly being used for home improvement
projects (i.e. renovations), rather than for buying new homes, because the size of the loans can be small.
PBHLs are allowed and managed in terms of the Pension Funds Act of 1956. The Act states that a loan that is given to a member through a pension fund, is an investment made by the fund in the member to enable him/her to: pay-off or settle a loan that’s been granted to the member by another party, such as a bank or building society, for immovable
property. Immovable property refers to assets such as houses, flats, apartments or land on which a house or a flat or an apartment will be built.
Buy a dwelling or land on which it’s expected that a dwelling will be built by the member or his/her spouse; and Make renovations, additions or alterations to the member’s
existing house. This means that the Pension Funds Act allows funds to give loans to its members, but only for the reasons given. When a member applies for a PBHL, s/he must know that it must be repaid to the fund. These loans are given for housing purposes only and may not be used as a way to allow members to abuse/access their retirement benefits early.
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