By Priscilla Simasiku
You have been contributing to your pension every single month. Faithfully. Quietly. Often without thinking much about it. But here is what you probably do not know: that the pension you have been building is more powerful than you realise, not just for the day you retire, but also before you retire.
In Namibia, pension fund members have access to a home loan that is more affordable. This loan is available for rural, communal, urban, and peri-urban areas, and importantly, it does not require the members to use their retirement savings. This home loan is called the Government Institute Pension Fund (GIPF) Pension-Backed Home Loan. And it could change your life.
The moment most pension fund members hear the words “use your pension for a home loan,” something in them tightens. They think: if I use my pension now, what will be left when I retire? Well, when you take a Pension-Backed Home Loan, you pledge up to one-third of your pension withdrawal benefit as security.
Basically, while your Pension-Backed Home Loan is active, your pension does not pause, shrink, or freeze. Every month, your normal contributions will keep flowing in and the interest you pay on your loan helps to grow your pension fund. So, while you sleep under your own roof tonight, your pension is still quietly working in the background.
Think of it like a title deed on a house, the bank does not own your house, they simply hold it as a guarantee. Your pension works the same way. It is important to note that the pension is not withdrawn; it remains fully invested in GIPF until the member’s retirement date. The member’s pension is only pledged as security. Meaning, as a member, your pension savings continue to grow, while at the same time you gain access to a loan to build or improve your home today. The loan is repaid monthly in equal instalments through payroll deduction.
The Pension-Backed Home Loan administered by Kuleni Financial Services (Pty) Ltd, is offered at the repo rate plus 2.5%. That makes it one of the most affordable loan rates available to any member of the GIPF, which is significantly cheaper than a commercial home loan, and a fraction of what a personal loan would cost you.
The years of contributions you have already made are the reason a lender can offer you affordable finance. Your discipline builds the security for your loan, and the low interest rate is your reward for it.
This loan was not designed for the wealthy. It was designed for the teacher in Oshana. The nurse in Rundu. The government clerk in Windhoek. The police officer posted at Gam Settlement. Basically, anyone who is a member of GIPF.
Unlike traditional mortgages, the PBHL Scheme works in both proclaimed (urban areas) with title deeds and in communal and unproclaimed areas (villages) with customary land rights or leasehold certificates. If you live in a village and you want to build, this scheme is there to help you own a decent home.
Your pension is too valuable to pledge against anything that does not build lasting security for your family, thus the PBHL loan can only be used for the following purposes:
- Build a house.
- Purchase land for residential development.
- Renovate — roofing, solar, plumbing, extensions, tiling, fencing, and more.
- Solar and Boreholes
- Settle an existing mortgage bond.
The PBHL cannot be used for personal spending, vehicles, business costs, or movable items. If you default on the loan and it cannot be recovered any other way, the pledged one-third can be claimed from your pension at retirement. If you leave your job before the loan is fully repaid, the outstanding balance comes out of your withdrawal benefit.
Kuleni assesses your affordability before approving any loan precisely to prevent you from taking on more than you can manage. The process protects you.
If all your documents are in order, Kuleni processes your application within Ten (10) working days. Here is all it takes:
- Get your pension benefit statement from your HR department or contact kuleni at homeloan@kuleni.com.na.
- Submit your application with your ID, payslip, land documents, quotations, insurance, NamRA certificate at Homeloan@kuleni.com.na
- Kuleni assesses your affordability and, document verification, policy compliance and approves your application.
- You sign the pledge of pension benefits form, then you formally pledge your one-third entitlement.
- Funds go directly to contractors or sellers; they will never go into a personal account. Kuleni will inspect progress.
- Repayments are deducted from your salary through payroll deductions. There will be no surprises.
Contributing to your pension each month reflects a commitment to investing in yourself, which many find it difficult. In the long run, this discipline can help you qualify to use one-third of your pension to own your dream home. Therefore, it is important to preserve your pension when changing jobs, as doing so allows you to build your pension and support your goal to own a home before retirement.
Home Loan Manager, Kuleni Financial Services (Pty) Ltd
