New amendments will allow loans from pensions
Mbongeni Mguni | Monday November 15, 2021 13:22
The provision will be for pension fund members who have not yet started drawing a monthly payout from their funds, she said in Parliament on Thursday.
Serame was responding to a question by Selebi Phikwe West legislator, Dithapelo Keorapetse who wanted to know how government is assisting homeowners avoid foreclosure, given the difficult economic environment caused by COVID-19. Keorapetse wanted to know the extent of mortgage foreclosure, whether banks were still helping with mortgage deferral plans introduced last year and whether government had a plan to provide homeowners with protection through mortgage assistance relief services.
In response, Serame said while there was no legislation for home ownership protection, the Retirement Funds Act was being reviewed with one of the areas under consideration being the introduction of pension backed mortgage loans.
“Under this arrangement, pension fund members, that is, those who have not yet started earning a monthly annuity, will be in a position to get direct loans from pension funds or to use part of the accrued pension as security for mortgage loans,” she said.
The review comes as Members of Parliament and other economic commentators have called on government to allow pension fund members to access a portion of their accrued benefits to assist with mortgages, home ownership or financial difficulties.
The calls have grown louder as COVID-19 wreaks havoc on incomes, with Keorapetse noting that “many people lost their businesses, jobs and livelihoods” in spite of the State of Emergency.
“The starting point Honourable Minister is to understand the extent of the problem. “Are you adequately appraised on the extent of the problem? “Does the Minister have an idea of the number of people who experienced financial hardship directly and indirectly due to the Coronavirus pandemic who struggled to make mortgage payments and sought payment relief from banks since COVID-19 engulfed us,” he said.
According to data shared by Serame, commercial banks restructured an average of P289 million per quarter in mortgage loans for residential property between June 2020 and September 2021. The banks assisted an average of P255 million per quarter in mortgage loans for owner occupied property over the same period.
The Minister said commercial banks had granted repayment moratoriums amounting to P23.2 billion between April and December last year, with commercial real estate loans accounting for 30.4 percent of this figure, the largest proportion.