The National Pension Commission (PenCom) on 23rd September 2022 approved the issuance and immediate implementation of the guidelines on Accessing Retirement Savings Account (RSA) balance towards payment of Equity Contribution for Residential Mortgage.
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 payment of equity for residential mortgage.
Subsequently, the commission released a list of 34 primary mortgage banks to participate in the use of the RSAs for residential mortgage.
The Pension Fund Operators Association of Nigeria (PenCom) in trying to enhance understanding and public knowledge about the pension mortgage guidelines have answered a lot of the questions bothering people’s mind.
1.Who is eligible? Anyone with a Retirement Savings Account (RSA) or Micro Pension Plan (MPP), provided they are in active employment or self-employed.
2.Number of years to retirement? You can apply as long as you have at least three years to retirement.
3.Couples can Apply: Married couples can apply but have to be individually eligible.
4.Maximum Applicable: The maximum that can be used is 25% of the total mandatory RSA balance at date of application.
5.Voluntary Contributions: Yes, you can use some or all of the contingent portion of your voluntary contributions to shore up what is needed to make up your equity contribution for your residential mortgage.
6.Mortgage Lender to use: That’s up to you to make your own choice. However, note that to qualify as a mortgage lender under this scheme, the company must be licensed by the Central Bank of Nigeria (CBN).
7.Qualifying for a mortgage loan: That is between you and your lender. Your PFA will get involved when you have an offer letter from a property owner and a licensed mortgage lender.
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8.Hurdles to Consider: If you joined the CPS or MPP before July 1, 2019, you must have your record updated through the data recapture program.
9.Do you need a Connection: All you need to do is to approach your PFA directly (not through a proxy) and determine your eligibility criteria, go through the process and make your application.
10.Those who have accessed 25% of their RSA after redundancy: Yes, you are eligible, however, your RSA must have received employer and employee contribution for a MINIMUM of 60 months (5 years) from the date of first contribution. In any case, your PFA should let you know your eligibility.
11.Those who are retired: Existing Retirees on CPS and exempted persons under the PRA 2014 shall not be eligible to use their RSA balances for payment of equity contribution for Residential Mortgage.
Ibrahim Kangiwa, head of Investment Department, National Pension Commission (PenCom), said for contributors under the Contributory Pension Scheme (CPS) to be eligible to use their RSA balance for acquisition of residential mortgages, he must have contributed for five years (60 months) cumulative of employer and employee’s mandatory contributions.
He said the same thing was applicable to the contributors under the Micro Pension Plan (MPP), adding that married couples, who individually met the eligibility criteria, were also eligible.
On authorised limit for equity contribution that qualifies a contributor, Kangiwa put the maximum allowed at 25 per cent of the RSA balance, noting, “where 25 per cent of RSA balance is more than equity contribution, the RSA holder can only access the amount equivalent to equity contribution required.
“Where 25 per cent is not sufficient for equity contribution, RSA holder may utilise Voluntary Contribution (VC) in line with the Voluntary Contribution guidelines.
“Where 25 per cent is not sufficient for equity contribution, Micro Pension (MP) contributor may utilise contingency portion in line with MP guidelines.
“Where 25 per cent is insufficient as equity contribution, RSA holder shall deposit the difference with the mortgage lender,” Kangiwa explained.
Those exempted from this initiative, according to Kangiwa, include RSA holders that have less than three years to retirement; existing retirees on CPS; exempted persons under the PRA 2014 and RSA holders who do not have both employer and employee’s mandatory contributions for a cumulative minimum period of 60 months.
He said that equity contribution was not for refinancing existing mortgage, outright purchase of property and purchase of land, noting that the property shall be for residential purpose only.
Kangiwa said the objective of the initiative was to provide housing for first time homeowners and improve the standard of living of RSA holders under the CPS by facilitating their ownership of residential homes during their working life.
According to PenCom, out of the 34 banks, 19 are from Lagos, 7 from Abuja and the remaining 8 are from other states.
The mortgage lenders from Lagos are Abbey Mortgage Bank Plc; Brent Mortgage Bank LTD; AG Mortgage Bank Plc; Centage Savings & Loans; City Code Savings & Loans; First Trust Mortgage Bank; Global Trust Mortgage; Haggai Mortgage; Homes-Base Mortgage; Imperial Homes; Jubilee-Life Mortgage Bank; Lagos Building & Investment; Prudential Mortgage Bank and Refuge Homes Savings & Loans.
Others from Lagos include Resort Savings & Loans; Safetrust Mortgage Bank; STB Building Society; Union Homes, Mayfresh Mortgage Bank and Resort Savings & Loans
Those from Abuja are Aso Savings & Loans; FHA Homes Ltd; First Generation Homes; Infinity Trust Mortgage Bank; MDSL Mortgage Bank LTD; Nigeria Police Mortgage Bank and Platinum Mortgage Bank
The remaining are from other states: Akwa Savings & Loans Ltd and Mutual Alliance both from Akwa Ibom; Coop Savings & Loans from Oyo State; Delta Trust Mortgage Bank; Gateway Mortgage Bank, Ogun State; Jigawa Savings & Loans, Jigawa state; Kebbi Stare Homes, Kebbi State and Living trust formally Omoluabi, Osun State
The mortgage firms are divided into two: national with minimum capital requirement of N5bn and state with N2.5bn minimum capital. In all, 13 are categorised under national, while the remaining are 21 under state.
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