PenCom okays 25% withdrawal from pension funds as equity contribution for mortgages

The National Pension Commission (PenCom) has approved the issuance and immediate implementation of the guidelines on accessing Retirement Savings Accounts (RSA) balance for payment of equity contribution for residential mortgages by RSA holders.

In a statement issued over the weekend in Abuja and signed by the management of the Commission, all stakeholders and the public, particularly Retirement Savings Account (RSA) holders, were notified of the approval and immediate implementation of the Guidelines.

According to PenCom, the approval was 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 a residential mortgage.

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

However, to qualify for the mortgage, PenCom said that interested RSA holders (applicants) must 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 further explained 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.

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

The guideline states: “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 added 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 a valid Pension Clearance Certificate (PCC).

It added: “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.”

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