Members of retirement benefits schemes can look forward to apportioning up to 50% of their savings for a mortgage or a loan to purchase a residential house. This follows URBRA’s development of enabling regulations which now await the Minister’s signature so that they become law upon publication in the Gazette.
For a long time, savers have expressed the need to use their savings as collateral to access loans so that they invest in productive projects when they are still young and strong enough. Faced with the Covid19 pandemic, people even demanded to be given access to part of their savings to enable them meet daily needs like food and medical care.
The provision for a mortgage or housing loan is different from the recent demand for mid-term access because the former is provided for in the URBRA Act, 2011. According to Section 68, 2 (a), a prescribed
proportion of a member’s benefits may be assigned and used to secure a mortgage or a loan for purchasing a residential house. With the demand for mid-term access during the covid19 pandemic, people wanted to get money and spend the way they wanted.
Some people are concerned that the new regulations will affect the funds’ assets, but Ms Rita Nansasi, URBRA’s Director Legal Services gave assurance that using savings as collateral would not diminish the value of the fund in any way.
Section “Members will actually not touch the money. Rather they will get a letter of comfort, a form of guarantee from the fund to get that mortgage, so that bank will look at them as better borrowers. Actually, someone should already have a means to pay and go to the fund as a last resort. You have to first exhaust all the options for payment,” she clarified.
The greatest advantage is that people will be able to get housing, a shelter over their heads and better interest rates from the banks. However, those who have meagre savings with the funds will not benefit much because the regulations allow for only 50% of one’s savings.
The Authority will now also develop regulations to enable members apportion a part of their savings to medical expenses, as provided for in the URBRA Act. Section 68, 2 (b) provides that a prescribed portion of a member’s benefits may be assigned to pay for a member’s medical treatment, upon recommendation of the Uganda medical Board.
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