The Namibian government has recently approved a reduction in the interest rate pension funds must apply when they provide housing loans to members. This decision has sparked national discussion, as it directly impacts the interests of members of both public and private pension funds who may want to utilise their retirement savings to secure a home.

Pension-backed housing loans are not a new phenomenon. The Pension Funds Act No. 24 of 1956, as amended, has long made provision for such loans under Section 19(5) (a), together with Section 37 D of the Act. Most private occupational pension funds converted from the defined benefit to the defined contribution (or money purchase) structure around Namibia’s independence and have since offered these types of loans to their members, in accordance with their fund rules.

What is new, however, is the growing national interest, and in particular, the advocacy by government employees, and the renewed commitment to implement these schemes at scale. This shift in momentum has been sparked by the recent announcement by the Government Institutions Pension Fund (GIPF) to roll out a pension-backed housing loan scheme, backed by members’ interest in the fund. For many years, the GIPF has provided funds to lending institutions, enabling them to offer loans to its members.

As with any other fund that makes provision in its rules, qualifying GIPF members will now be able to borrow up to one-third (1/3) of their pension benefit. The loan will be repayable at an interest rate of the repo rate plus 2.5%.

According to Section 19(5)(b)(iii), and regulation 43 of the Pension Funds Act, such loans may not be granted at an interest rate lower than that prescribed by regulation. Until recently, the minimum allowable rate was the repo rate plus 4%. However, with effect from 1 July 2025, the Minister of Finance has amended Regulation 43 to reduce the prescribed minimum rate to repo plus 2.5%, as officially published in the Government Gazette.

Read more: Economist