The National Pension Commission (PenCom) has opened the route for Retirement Savings Account (RSA) holders to assess 25 percent of the total mandatory RSA balance as at the date of application towards equity contribution for residential mortgage.
By this approval in line with Section 89 (2) of the Pension Reform Act 2014 (PRA 2014), eligible RSA holders can now use a portion of their RSA balance towards payment of equity for residential mortgage based on the terms and conditions set in the guidelines.
To be eligible, the pension contributors have to be in active employment, either as a salaried employee or as a self-employed person. The eligibility roll out begins with an offer letter for the property duly signed by the property owner and verified by the mortgage lender. And, the RSA of the applicant shall have both employer and employee’s mandatory contributions for a cumulative minimum period of 60 months (five years).
There is also accommodation for contributors under the Micro Pension Plan (MPP), provided the contributor has made contributions for at least 60 months (five years) prior to the date of his/her application.
However, certain categories of contributors are barred, the statement by PenCom state that RSA Holders that have less than three years to retirement are not eligible.
Besides, married couples, who are RSA holders, are eligible to make a joint application, subject to individually satisfying the eligibility requirements. Also, RSA holders, who registered before 1 July 2019, according to PenCom must have their records updated through the RSA data recapture exercise. The Commission clears that application for equity contribution for residential mortgage shall be in person and not by proxy.
PenCom made it clear that the maximum amount to be withdrawn shall be 25% of the total mandatory RSA balance as at the date of application, irrespective of the value of equity contribution required by the mortgage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. However, where 25% 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).
The guideline also cleared eligibility to qualify as a mortgage lender shall include license by the Central Bank of Nigeria (CBN), Contributory Pension Scheme compliant firm and have valid Pension Clearance Certificate (PCC). In addition, the Commission stated it shall publish names of the eligible mortgage lenders on its website