Justicia Shipena
Members of the Government Institutions Pension Fund (GIPF) will not be allowed to use their pension savings to pay for weddings.
GIPF chief executive officer Martin Inkumbi confirmed this during a press conference on the pension-backed home loan scheme (PBHLS), held on Monday.
He said pension savings may also not be used for business ventures or any other non-housing-related expenses.
“A member can access that money to finance their wedding; it is not allowed, and we unfortunately will not be able to allow the member to access money for that purpose, nor for other purposes, even including businesses, business opportunities or farming. That will not be permitted,” said Inkumbi.
His comments follow a recent report by The Namibian showing that some couples are spending up to N$200 000 on weddings.
Last month, the government approved the PBHLS, which allows GIPF members to access part of their pension savings for housing.
“As I have indicated, this whole scheme is based on the provisions of the Pension Fund Act. GIPF is a pension fund, and there is a specific purpose of and use for pension fund resources, [which] is to provide pension benefits to members and, of course, their beneficiaries. It’s not to provide loans for consumer goods, etc,” Inkumbi said.
He explained that the provision was introduced to help members who struggle to get home loans from commercial banks.
“A recognition has been made that there is an opportunity to use pension benefits for a productive purpose, such as helping a member who maybe finds it difficult to acquire a house through commercial lending to acquire a home,” he said.
On where members can build, Inkumbi said homes may be built in both proclaimed towns and rural villages, as long as there is proof of ownership or permission to occupy the land.
“What is important is that you must have some form of ownership or permission to occupy the piece of land where that house is going to be built,” he said.
GIPF further clarified that a primary home may be in either a rural or urban area.
“A member can have two primary homes, as long as there is some criteria we check for primary residence, whether your kids are staying in that house… or you yourself,” Inkumbi said.
At the same time, Inkumbi announced that GIPF has unlocked access to pension-backed housing loans, committing up to N$900 million to help members buy or build homes.
Members will now be able to borrow up to one-third of their pension benefits for this purpose.
The Fund is also preparing to roll out the PBHLS, but full implementation depends on the signing of a Memorandum of Understanding (MoU) with the office of the prime minister.
The MoU will define the roles and responsibilities of each party.
The scheme will only launch once the interest rate, set at the repo rate plus 2.5%, is officially gazetted.
The GIPF board of trustees approved the rule amendments for the scheme in 2016.
Regulatory approval from the office of the prime minister and the Namibia Financial Institutions Supervisory Authority (Namfisa) followed in 2018.
The PBHLS is aimed at active GIPF members and it allows them to use their pension benefits as collateral to secure home loans, particularly for those who do not qualify for traditional financing.
First Capital Housing Scheme and Kuleni Financial Services have been selected to manage applications, repayments, and member support under the scheme.
