Amaka Obiefuna

Retirement Savings Account (RSA) holders can now use 25 percent of their RSA balance to pay for residential mortgage, now that the National Pension Commission (PenCom) has approved the issuance and immediate implementation of the Guidelines on Accessing RSA Balance towards Payment of Equity Contribution.

The approval is in line with Section 89 (2) of the Pension Reform Act 2014, which allows RSA holders to use a portion of their RSA balance towards
payment of equity for residential mortgage.

The Commission stated that interested RSA holders should contact their Pension Fund Administrators (PFAs) for more information and guidance.
On eligibility criteria, PenCom said the Guidelines cover pension contributors in active employment, either as a salaried for Residential Mortgage by RSA Holders, employee or as a self-employed person. Meanwhile, interested RSA holders 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 must also have both employer and employee’s mandatory contributions for a cumulative minimum period of five years.
While contributors under the Micro Pension Plan (MPP) are also eligible,
provided they have made contributions for at least five years, prior to the date of their application.

However, RSA Holders that have less than three years to retirement are not
eligible. Married couples, who are RSA holders, are eligible to make a joint
application, subject to individually satisfying the eligibility requirements.
RSA Holders who are registered before July 1, 2019, must have their records
updated through the RSA data recapture exercise.

PenCom further said that application for equity contribution for residential mortgage must be in person and not by proxy.
According to the guidelines, the maximum amount to be withdrawn
shall be 25 percent of the total mandatory RSA balance as at the date of application, irrespective of the value of equity contribution required by the mortgage lender.
Where 25 percent 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, PenCom noted.

To qualify as a Mortgage Lender for this purpose, the company must be licensed by the Central Bank of Nigeria (C hiBN), comply with the Contributory Pension Scheme (CPS) and have valid Pension Clearance Certificate (PCC).
The Commission has promised to publish names of the eligible mortgage lenders on its website www.pencom.gov.ng.