Mortgage Loan
The National Pension Commission (PenCom) in Section 89 (2) of the Pension Reform Act (PRA) 2014 allows RSA holders to apply 25% of their Retirement Savings Account (RSA) balance as equity contribution for residential mortgage.
Accessing Mortgage with your Pension
The dream of owning a home is often hindered by financial constraints, but recent developments by the National Pension Commission (PenCom) has introduced an innovative solution which allows contributors in the Contributory Pension Scheme (CPS) to access up to 25% of their Retirement Savings Account (RSA) balance as equity contribution towards securing a residential mortgage. This provision is part of the broader reforms aimed at making pension funds more accessible and beneficial to contributors beyond retirement income..
This initiative is governed by the Pension Reform Act 2014, and PenCom guidelines on accessing 25% mortgage using your pension account.The National Pension Commission (PenCom) oversees the implementation and ensures compliance with the guidelines to safeguard contributors’ interests.
It is a transformative step in the Nigerian pension landscape, providing a practical solution to the housing challenges faced by many contributors. By leveraging a portion of their RSA balance, contributors can achieve the dream of homeownership without compromising their retirement security. This initiative not only benefits the individual contributors but also stimulates economic growth by boosting the housing sector.
- Homeownership: Achieve your dream of owning a home.
- Reduced financial burden: Use your pension savings to finance your home purchase.
- Flexibility: Choose from a range of approved properties or select a property of your choice.
- Long-term investment: Invest in a valuable asset that appreciates over time.
- Security: Enjoy a sense of security and stability with homeownership.
- Accessibility: Available to all RSA holders who meet the eligibility criteria, regardless of their employment sector.
- Transparent Process: Governed by clear guidelines set by PenCom, ensuring transparency and fairness in the application and approval process.
- No Additional Collateral Required: The RSA balance itself serves as collateral, eliminating the need for additional assets to secure the loan.
- The applicant shall obtain a property offer letter from the Property Owner.
- Forward same to the mortgage lender.
- An application for mortgage shall be issued by the mortgage lender.
- The Mortgage lender verifies the genuineness of the property and ensure it has a valuation report.
- CPL will issue a duly endorsed RSA statement to the applicant.
- The Client submits the Mortgage application to the Mortgage Lender.
- CPL ensures the application is okay then sends to PENCOM for approval.
- On approval, CPL Issues instruction to the PFC for remittance of equity contribution to the account of the Customer with the Mortgage Lender.
- CPL maintains record of applications for equity contribution.
- Render return to the Commission on the payments made in respect of equity contribution on monthly and annual basis.
- An applicant (RSA Holder) must have an offer letter for the property duly signed by the property owner and mortgage lender.
- RSA holders that have less than 3 years to retirement are not eligible.
- Existing retirees and exempted individuals under PRA 2014 are not eligible to use 25% of the balance for equity contributions.
- Micro pensions contributors are eligible. The contingent portion of their contributions will be utilized for this purpose. The micro-pension contributor must sign a consent letter with the PFA to that effect.
- The applicant must have both RSA contributions (employer and employee) portion remitted for a minimum of 60 months prior to the submission of his application.
- The contingent portion of the RSA holders VC contributions can be utilized as part of their 25% balance towards the payment of equity contributions. The NSITF and PRE-ACT contributions can also be utilized as part of the RSA holders.
- The RSA holder must sign a consent letter with the PFA to that effect if he agrees to utilize the contingent value of the VC contributions or the PRE ACT or NSITF benefit as equity.
- The RSA holder shall provide necessary documentations to the PFA as stipulated in sections 5.0 of the guideline
- RSA holders that have accessed 25% of their balance prior to the issuance of the guideline are eligible to access another 25% of their balance.
- RSA holders that have utilized 25% of their RSA balance as payment of equity contributions towards a residential mortgage can still access 25% of their balance as loss of job benefit payment, in the event of a job loss.
- Married couples who are RSA holders can make a joint application on the grounds that they meet the requirements set up in the guideline.
