Loans guaranteed by authorized pensions – Namfisa

CITIZENS can still borrow from their pension to build or renovate their homes, even under the Financial Institutions and Market Law (Fima) which is not yet operationalized, the Financial Institutions Supervisory Authority of Namibia (Namfisa).

The pension fund regulator revealed this yesterday, dismissing rumors that the benefit would be canceled under Fima.

According to the statement, even the pension fund law provides for pension funds to lend members a portion of their pension fund savings directly to purchase real estate or to carry out renovations on existing real estate.

Pension benefits can also be used as collateral.

“In addition, the Pension Funds Act allows pension funds to provide pension-backed guarantees to people who provide housing loans to their members for the same purpose. Fima also provides direct housing loans from member funds as well as pension-backed guarantees,” the regulator said.

Recent World Bank reports indicate the need for around 45,000 new homes per year as the demand for formal housing in Namibia increases with urbanization.

Namibia experiences an annual urbanization of about 3.8%, translating into 50,000 people or 13,500 new urban households, each year.

The share of the urban population is expected to increase from 52% to 60% by 2030, according to the World Bank.

With the provision of formal housing not keeping pace with demand, this has led to the rapid growth of informal settlements and has been the call for many social activists to come up with solutions for using retirement savings to buy homes.

Namfisa said pension fund members should familiarize themselves with the rules and constitution of a pension fund to which they are contributing to determine whether they plan for a particular fund to provide direct housing loans or loan guarantees. housing backed by member pensions.

“The rules of the fund will also determine the extent of loan or guarantee that can be provided to members. Pension fund members are urged to read their pension fund rules and familiarize themselves with their rights and responsibilities. If members have any questions regarding their rules, the same can be raised with their respective senior manager or pension fund trustees,” Namfisa said.

There are over 130 registered pension funds in Namibia with assets exceeding N$250 billion, whose investments have been partly absent in the housing sector despite high housing needs.

The World Bank has recommended that there is a need to introduce innovative market-tailored financial products for the low- and middle-income housing market, and pension-backed housing is one such element that even the Pension Fund government institutions adopted.

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