Nigeria: PenCom Approves Use of 25% Pension Savings for Mortgage

The National Pension Commission (PenCom) has issued Guidelines on Accessing Retirement Savings Account (RSA) of 25 per cent savings to pay equity contribution for residential mortgages by RSA holders.

The commission said 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 mortgages.

PenCom, therefore, directed interested RSA holders to contact their Pension Fund Administrators (PFAs) for guidance.

The guidelines cover pension contributors in active employment, either as a salaried employee or as a self-employed person.

According to the commission, interested RSA holders (applicants) must, among other things, 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).

It further stipulated that 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.

RSA Holders that have less than three years to retirement are not eligible, according to the guidelines.

Also, married couples, who are RSA holders, are eligible to make a joint application, subject to individually satisfying the eligibility requirements.

According to Pencom, “RSA holders, if registered before 1 July 2019, must have their records updated through the RSA data recapture exercise while the application for equity contribution for residential mortgage shall be in person and not by proxy.

PenCom further noted that to qualify as a Mortgage Lender for this purpose, the company must be licensed by the Central Bank of Nigeria (CBN), comply with the Contributory Pension Scheme (CPS) and have a valid Pension Clearance Certificate (PCC).

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