The Minister of Finance and Public Enterprises, Iipumbu Shiimi, has revealed that Members of Parliament are set to receive a pension-backed home loan after entering into an agreement with Standard Bank.
The agreement, according to Shiimi, will offer a maximum loan amount limited to 70% of individual MPs one third lump sum.
The arrangement will see Standard Bank act as the lender, utilising its funds to offer the loan, while MPs and Other Office Bearers Pension Fund’s role will be primarily to provide guarantees.
“The Fund, representing Members of Parliament and Other Office Bearers, has an agreement with the Bank on behalf of its members to enable access to these loans. This loan will only affect your 1/3 lump sum if you leave before fully repaying the loan. The outstanding loan balance will be deducted from your lump sum. It is therefore important to note that the maximum loan amount you can access is limited to 70% of your 1/3 lump sum,” Shiimi explained in Parliament while responding to questions raised by Popular Democratic Movement MP Elmma Dienda, who wanted to know how their pension will be impacted as a result of the home loan.
On the arrangement entered by the Members of Parliament and Other Office Bearers Pension Fund, he said: “The Fund offers a housing loan facility backed by pensions. These loans are provided by a financial institution with an arrangement with the Fund, in this instance, Standard Bank Namibia. The Fund provides assurances to the Bank, leveraging the members’ accrued pension benefits, and in return, the Bank extends a loan to the member.”
Shiimi further explained that the MPs’ funds are managed by designated asset managers appointed by the Fund, and registered by NAMFISA.
“Currently, the pension housing loan facility does not involve direct loans from your pension accrual. Instead, it operates as an indirect loan, where the Bank lends the money, and the Fund offers a guarantee,” he said.
Further quizzed on who will be responsible for paying off interests and whether such accrued interest is diverted to the bank or the fund, Shiimi said “the loan is issued by the Bank and not by the Members of Parliament and Other Office Bearers Pension Fund. The Fund exclusively provides a guarantee or collateral based on your pension for a housing loan offered by the Bank. Therefore, you are responsible for repaying the bank loan, including the interest. MPs’ deductions are channelled directly to Standard Bank, following the agreement with the Members of Parliament and Other Office Bearers Pension.”
This comes as the Government Institutions Pension Fund (GIPF) expects to finally roll out pension-backed home loans to help workers secure houses.
The pension home loan scheme mooted by the GIPF will allow its members to use their pensions as collateral to purchase a house or carry out renovations and will also allow funding for the construction of property even in rural areas.
“The process is almost complete with only a deduction code remaining,” he said.
