PenCom Approves Use Of 25% RSA Balance As Equity Contribution For Mortgages

For Nigerians who have been advocating the use of their Retirement Savings Account for the payment of residential mortgages, then they need not bother anymore as the National Pension Commission has finally approved the guidelines for such purpose.

The Commission in a statement issued on Friday informed all stakeholders and the general public, particularly Retirement Savings Account (RSA) holders, that it 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.

The approval, according to PenCom, 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.

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

To qualify for the mortgage, PenCom said that interested RSA holders (applicants) must meet have an Offer Letter for the property duly signed by the property owner and verified by the Mortgage Lender, adding that the RSA of the applicant will have both employer and employee’s mandatory contributions for a cumulative minimum period of 60 months (five years).

It explained further that a Contributor under the Micro Pension Plan (MPP) is also eligible, provided they have made contributions for at least 60 months (five years) prior to the date of his/her application.

The guideline added that RSA Holders that have less than three years to retirement are not eligible, noting that married couples, who are RSA holders, are eligible to make a joint application, subject to individually satisfying the eligibility requirements.

It said, “RSA holders, if registered before 1 July 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.”

On the maximum withdrawal percentage, PenCom said this must be 25 per cent 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 noted that 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.

On eligibility, the Commission said 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 valid Pension Clearance Certificate (PCC).

“The Commission shall publish names of the eligible mortgage lenders on its website. The Commission, hereby, invites interested RSA holders to contact their PFAs for more information and guidance. The complete Guidelines can be found on www.pencom.gov.ng,” it added.