Social security contributions as collateral

I am a contributing member of the National Social Security Fund (NSSF) in Tanzania and am planning to apply for a home mortgage loan from one bank to purchase a residential house. In support of my application, I intend to use my social security entitlements as collateral. However, I am worried about what would happen if I lose my source of income and stop servicing the mortgage loan? What does the law say?

RG, Dodoma

Under section 39 of the Social Security Act, a member who has not attained retirement age may use part of their social security entitlements as collateral for a home mortgage. The law limits this collateral to not more than 50% of the member’s total benefit entitlement at the time of award of the loan. The Social Security Schemes (Use of Member’s Benefit Entitlements as Collateral for Home Mortgage) Regulations, 2024 further provide that the house itself must be the first collateral for the mortgage, while the social security entitlements operate as additional security. 

Subsequent loss of employment or income and stoppage of paying the mortgage does not automatically mean that the bank can immediately take your entire NSSF entitlement. The collateral becomes enforceable when the member defaults and the institution takes the prescribed steps for enforcement. Importantly, the law permits only the portion assigned as collateral to be affected; it does not turn your entire NSSF account into ordinary property available to the bank. Your biggest risk is therefore the mortgaged house itself, because the law requires the house to be the first collateral. If you lose your income, you should immediately approach the bank to negotiate restructuring, a repayment arrangement, or other relief rather than simply allowing arrears to accumulate. You can consult your lawyer for more guidance.