The Nigerian Pension Commission (PenCom) has announced the final approval for pension contributors in active employment to use 25% of the balance of their Retirement Savings Account (RSA) to pay for equity contribution for mortgage.

This appears to be a huge relief for Nigerians who have been advocating for the use of such fund for payment of residential mortgages.

This disclosure is contained in a statement issued by the Spokesman of PenCom, Mr Abdulkadir Dahiru, in Lagos on Friday, where he said the policy specified in the new guidelines of the National Pension Commission (PenCom) would be implemented with immediate effect.

The commission said the approval was in line with Section 89 (2) of the Pension Reform Act 2014 (PRA 2014), which allowed RSA holders to use a portion of their RSA balance toward the payment of equity for residential mortgage.

PenCom outlines RSA holders eligible to benefit from policy

The PenCom Spokesman in the statement said the guidelines covered pension contributors in active employment, either as salaried employees or as self-employed persons.

It stated, “Interested RSA holders (applicants) must 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, equivalent to five years.

A contributor under the Micro Pension Plan (MPP) is also eligible, provided he or she has made contributions for at least 60 months (five years) prior to the date of his or her application.’’

PenCom pointed out that RSA holders that have less than 3 years to retirement are not eligible.

It also stated that married couples, who were RSA holders, were eligible to make a joint application, subject to individually satisfying the eligibility requirements.

The commission said RSA holders, who registered before July 1, 2019, must have their records updated through the RSA data recapture, adding that application for equity contribution for residential mortgage should be forwarded in person and not by proxy.

Maximum amount to be withdrawn for mortgage contribution

PenCom said the maximum amount to be withdrawn shall be 25% of the total mandatory RSA balance as at the date of application, irrespective of the value of equity contribution required by the mortgage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

It stated, “Where 25 per cent 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 added that 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 valid Pension Clearance Certificate, adding that the names of eligible mortgage lenders shall be published on the commission’s website.