CASE NO: NBFIT – 0007/2023
APPLICANT 7 v. NBFIRA
NON-BANK FINANCIAL INSTITUTIONS TRIBUNAL
CASE NO: NBFIT – 0007/2023
Sector - Retirement Funds
1. Issue
1.1. Withdrawal from pension benefits to pay for mortgage loan arrears, whether permitted by the Retirement Funds Act.
2. Summary of Facts
2.1. In the matter between Applicant 7 v. NBFIRA case number NBFIT-0007/2023, the Applicant lodged her appeal against the Non-Bank Financial Institutions Regulatory Authority (NBFIRA) after it did not allow her appeal against First National Bank Botswana Pension Fund (FNBBPF) for refusal to pay her mortgage loan with a portion of her deferred pension benefit. The Applicant was retrenched from the First National Bank Botswana (FNBB) on or around September 2021. On or around March 2023 FNBB was given judgment against the Applicant for the payment of her mortgage loan. Pursuant to this the Applicant sought to withdraw a portion of her pension benefit to liquidate her mortgage loan arrears in accordance with Section 52 of the Retirement Funds Act, 2022. Her request was declined by both FNBB Pension Fund and the Authority.
3. Issues for Determination:
3.1. Whether section 52 (1) (d) permits withdrawals from pension benefits to pay mortgage loan arrears without liquidating the entire debt
4. Relevant Provisions of the Law
4.1. Retirement Fund Act
Section 52 of the Retirement Funds Act, 2022
Section 52 (1) (c)
“Notwithstanding Section 49, a licensed fund may deduct a benefit payable to a member or to his or her dependants or nominees –
(c) in the case of default in the repayment of any loan by a deferred member, having provided proof that he or she is unemployed for six consecutive months, if such a deduction is only effected as a last resort after the board of the fund is satisfied that no other arrangement for the required payment can be made;”
Section 52 (1) (d) (ii) (ii) (aa)
“Notwithstanding Section 49, a licensed fund may deduct a benefit payable to a member or to his or her dependants or nominees –
(d) any amount due on the repayment of a mortgage loan by a member on the date:-
(ii) which he or she becomes a deferred member of the fund where such deduction is effected as the last resort after the board of trustees is satisfied that no other arrangement can be made:-
provided that –
(ii) where a person’s membership is deferred –
(aa)the member shall demonstrate that the amount owed shall be covered by his or her accrued benefits”.
5. Determination
The Tribunal dismissed the application for the following reasons:
5.1. That because Applicant’s loan was a mortgage, she could not benefit from the Section 52(1)(c) which allows deferred members who had defaulted on any loan to withdraw a portion of their benefit to pay for the amount in default.
5.2. That Applicant fell into the category described at Section 52(1)(d) which deals with defaults on mortgage loans. However, this section states that the member must demonstrate that the amount owed shall be covered by his or her accrued benefits, which means the member’s pension benefit must exceed the amount owed on the loan. The Applicant’s pension benefit was less than the amount she owed on the mortgage loan; thus, she was unable to demonstrate that the amount owed would be covered by her accrued benefits. Therefore, she could not benefit under section 52 (1) (d).
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