Section 19 (5) of the Pension Funds Act makes provision for members to pledge their Pension or Provident Fund Withdrawal benefit as security for a housing loan.
The Fund does not make direct housing loans to its members. The Fund issues guarantees to banks and other financial institutions so that members can obtain a loan by using their "after tax" withdrawal benefit as security.
The Banks enter into direct agreements with employers to arrange monthly deductions from employees' salaries.
Should the employee leave employment before paying off the loan, the Fund will settle the outstanding loan balance from the benefit payable.
A consent form is to be completed by the employer and signed by the member together with two witnesses. |