Africa-Press – Namibia. The Government Institutions Pension Fund (GIPF) Pension-Backed Home Loan Scheme (PBHLS) will come into effect next January.
The PBHL scheme will allow members to use one third of their pension fund to buy or build a house.
The scheme will also enable members to transfer their existing home loans financed by other financial institutions or commercial banks to this new scheme.
Cabinet secretary Emilia Mkusa and GIPF chief executive Martin Inkumbi signed an agreement yesterday to make the new provision official.
The home loan scheme offers cheaper rates than banks but risks members’ retirement savings if loans are not repaid.
The offered rate is the repo rate plus 2.5%, which is lower than the 3.5% minimum spread commercial banks are currently offering on their mortgage and other loans.
Inkumbi said the funds can be used for the purchase of a home or land, construction of new houses, home improvements or renovations to existing property in urban and rural areas, proclaimed and unproclaimed, areas across the country.
Additionally, active pension fund members can use their pension fund as collateral when buying a property or erven.
“In the instance of a mortgaged-backed home loan through commercial banks, or through the First Capital Housing Fund, the property serves as collateral. In the case of the PBHL, the pension credit or resignation transfer benefit (to the maximum of 33.33%) acts as collateral,” said Inkumbi.
Currently GIPF has made N$900 million available towards the fund.
The scheme is only available to active members who are currently employed and contributing monthly towards their pension.
“The PBHLS is designed in such a manner that active members’ retirement will not be negatively impacted at the time of retirement, as all outstanding loan amounts would have been repaid by the time the member reaches their retirement,” said Inkumbi.
He said the fund will provide the capital for the scheme, while two administrators – Kuleni Financial Services and First Capital – will oversee the administration.
Kuleni, a wholly owned GIPF subsidiary, is expected to handle about 65% of the administration, with First Capital managing the remaining portion.
Mkusa said the initiative will provide peace of mind to pension fund members as it secures homes.
“The commencement of the PBHLS will enable qualifying civil servants to secure residential properties, and have financial security, stability and peace of mind, knowing they are providing a safe place for their families and future generations” said Mkusa.
Namibia has a housing backlog of 300 000 units and will need about N$76 billion to clear this.
The government announced in March that there are plans to construct 50 000 housing units within five years to resolve the issue of informal settlements.
Currently, the number of shacks in Windhoek has tripled since 2011 – reaching 217 000 in 2023.
In Windhoek an average three-bedroom house costs roughly N$1.2 million in high- and middle-density areas.
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