BusinessDay

Contributors can now access mortgage with pension savings

Retirement Savings Account (RSA) holders can now access residential mortgage with 25 percent of the balance in their contribution, according to the National Pension Commission (PenCom).

In a statement, PenCom informed all stakeholders and the general public, particularly RSA holders, that the commission has approved the issuance and immediate implementation of the Guidelines on Accessing RSA Balance towards Payment of Equity Contribution for Residential Mortgage by RSA Holders.

According to the commission, the approval is in line with Section 89 (2) of the Pension Reform Act 2014 (PRA 2014), which allows RSA holders to use a portion of their RSA balance towards the payment of equity for residential mortgage.

It said in the statement on Friday that to be eligible for this, the guideline covers pension contributors in active employment, either as a salaried employee or as a self-employed person.

PenCom said: “Interested RSA holders (applicants) must meet the following conditions: Have an offer letter for the property duly signed by the property owner and verified by the mortgage lender; The RSA of the applicant shall have both employer and employee’s mandatory contributions for a cumulative minimum period of 60 months (five years); a contributor under the Micro Pension Plan (MPP) is also eligible, provided he/she has made contributions for at least 60 months (five years) prior to the date of his/her application; while RSA holders that have less than three years to retirement are not eligible.”

Read also: Pension operators enhances workplace emotion for employees

According to guidelines, married couples, who are RSA holders, are eligible to make a joint application, subject to individually satisfying the eligibility requirements; while RSA holders, if registered before July 1, 2019, must have their records updated through the RSA data recapture exercise.

“Application for equity contribution for residential mortgage shall be in person and not by proxy,” it said.

The commission said the maximum amount to be withdrawn shall be 25 percent of the total mandatory RSA balance as at the date of application, irrespective of the value of equity contribution required by the mortgage lender.

“Where 25 percent of a contributor’s RSA balance is not sufficient for payment as equity contribution, RSA holders may utilise the contingency portion of their voluntary contributions (if any),” it said.

It said to qualify as a mortgage lender for this purpose, the company must be licensed by the Central Bank of Nigeria, comply with the Contributory Pension Scheme and have a valid Pension Clearance Certificate.

According to the guidelines, the commission shall publish the names of eligible mortgage lenders on its website.

It said interested RSA holders should contact their Pension Fund Administrators (PFAs) for more information and guidance.

As at the end of June 2022, total pension assets under management by the PFAs hit 14.2 trillion, while the number of registered contributors stood at 9,795,957 million.

Aisha Dahir-Umar, director general of PenCom, who disclosed the figure during a media workshop for journalists in Lagos, said the increasing number of pension contributors and funds was responsible for the recapitalisation of the PFAs.

She said the reason for the recapitalisation exercise was to ramp up the capacity of the PFAs to manage the increasing number of registered contributors and the value of pension fund assets.

PenCom had in 2021 increased the minimum regulatory Capital (shareholders’ fund) requirements of PFAs from N1 billion to N5 billion, and PFAs have complied with the commission’s directive to increase their minimum capital during the exercise, which took place between April 27, 2021 and April 27, 2022.

On the level of implementation of the Contributory Pension Scheme, PenCom said as at the first quarter of 2022, 25 states had enacted pension laws on the CPS, two states were at the bill stage, and four had adopted the Contributory Defined Benefits Scheme.

The commission said it had continued to engage them through sensitisation workshops and capacity-building programmes.

Get real time updates directly on you device, subscribe now.